No matter what business you choose to enter, you will find yourself faced with a few constants. For example, your goals will invariably be to minimize your costs, maximize your sales and profits, and provide your customers or clients with a quality product or service that they will continuously seek from you. Another less pleasant constant that all businesses face is risk. These are the internal and external factors that are often beyond your control that, if not managed properly, can have serious consequences on your own enterprise.
Naturally, you want to minimize your business' exposure to such risks. Most business owners do this simply through instinct and intuition, and while it works for a blessed few, most who do it this way end up either barely breaking even or worse, going completely bust. The most effective way to minimize risk is to study, plan, and prepare for it by putting in place a risk management strategy.
The first step of formulating such a strategy is to identify and classify all of the possible risks your fledgling business faces. Is it vulnerable to certain weather conditions or the changing of the seasons? Will you require specialized equipment that could be potentially hard to replace? Could your business idea possibly be duplicated by competitors? The list is endless, and since no two businesses face the exact same risks, you will need to be especially diligent in compiling all of the possible dangers your company faces in order to formulate the most effective possible plan.
Once you've identified all the risks your business is exposed to, you can move on and looking for ways to minimize them. This could include taking certain operational steps in order to reduce the chances of a certain risk or hazard from occurring. A good example for IT-related businesses would be to backup all of your data at a separate secure site in order to reduce the risk of a catastrophic loss. Another more common risk minimization method is the use of insurance, which entails taking out policies on buildings, equipment, or against specific risks that are unique to your line of business. Most entrepreneurs are content to leave it at that, but a truly comprehensive risk management plan should go beyond this most basic step.
Relying on insurance to partially recoup your losses when the worst happens should be your very last option. A truly effective risk management strategy consists of several contingency plans for what steps should be taken when certain events occur. What should your business do when important equipment fails? Will you be able to repair it or borrow or purchase a replacement fast enough to avoid failing to meet the needs of your customers? If a certain natural disaster threatens your business, what steps will you take to ensure its survival and continued operation? Questions like these need to be answered well before such scenarios occur, and the answers need to be known by heart by all the key people in your business.
Article Source: http://EzineArticles.com/?expert=G._Sanntos
Naturally, you want to minimize your business' exposure to such risks. Most business owners do this simply through instinct and intuition, and while it works for a blessed few, most who do it this way end up either barely breaking even or worse, going completely bust. The most effective way to minimize risk is to study, plan, and prepare for it by putting in place a risk management strategy.
The first step of formulating such a strategy is to identify and classify all of the possible risks your fledgling business faces. Is it vulnerable to certain weather conditions or the changing of the seasons? Will you require specialized equipment that could be potentially hard to replace? Could your business idea possibly be duplicated by competitors? The list is endless, and since no two businesses face the exact same risks, you will need to be especially diligent in compiling all of the possible dangers your company faces in order to formulate the most effective possible plan.
Once you've identified all the risks your business is exposed to, you can move on and looking for ways to minimize them. This could include taking certain operational steps in order to reduce the chances of a certain risk or hazard from occurring. A good example for IT-related businesses would be to backup all of your data at a separate secure site in order to reduce the risk of a catastrophic loss. Another more common risk minimization method is the use of insurance, which entails taking out policies on buildings, equipment, or against specific risks that are unique to your line of business. Most entrepreneurs are content to leave it at that, but a truly comprehensive risk management plan should go beyond this most basic step.
Relying on insurance to partially recoup your losses when the worst happens should be your very last option. A truly effective risk management strategy consists of several contingency plans for what steps should be taken when certain events occur. What should your business do when important equipment fails? Will you be able to repair it or borrow or purchase a replacement fast enough to avoid failing to meet the needs of your customers? If a certain natural disaster threatens your business, what steps will you take to ensure its survival and continued operation? Questions like these need to be answered well before such scenarios occur, and the answers need to be known by heart by all the key people in your business.
Article Source: http://EzineArticles.com/?expert=G._Sanntos
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