For many business owners, risk management is not always at top of mind. Day-to-day operations, sales, productivity, and many other critical facets of business tend to take center stage, and risk management — which is just as critical – may not get the attention it requires. The following tips can help change that, and could make a big difference in the overall health of your company.

1. Use a checklist

Risk management starts with knowing what to take into consideration and how to address these concerns. It may prove useful to find a checklist and go through each issue point-by-point to identify the steps you're taking to deal with each one. Quite a few checklists are available online, and it might be a good idea to review several of them for ideas.

One checklist you should definitely review is the one provided by SCORE.1 It identifies ways to help protect your business from theft, disaster, safety hazards, cybercrime, and more. Download the checklist and compare your current strategy to the information presented. Look for areas where improvement is needed.

2. Keep an eye on cash flow

One of the biggest threats to any business's health is a problem with cash flow.2 You likely have  revenue and profit goals, but don't let these cloud your vision when it comes to cash flow and having enough money on hand to continue day-to-day operations. Develop and maintain an emergency fund. Stay on top of accounts receivable. Regularly conduct analyses to see where you can improve cash flow. Poor cash flow management is often cited as one of the top reasons businesses fail.

3. Find new revenue streams

You're no doubt familiar with the age-old saying, "Don't put all your eggs in one basket." It may sound cliché, but there's a reason the phrase has stood the test of time. Many businesses have failed as a result of focusing too hard on one revenue stream. While it makes sense in the short term to dedicate all your resources to making sure your primary source of revenue is in the best shape it can be, unforeseen changes in the market or economy can deliver a devastating blow to your business if you are not prepared. It pays to find alternative revenue streams in case the primary one struggles, even if on a temporary basis.

4. Practice quality control

When was the last time you evaluated your quality control efforts? Do you even have a process in place? Having an effective one could make a major difference in overall customer satisfaction, and ultimately the health of your company. This is especially crucial if your business is just starting out.

Kayla Sloan at Due.com says, "You should implement customer service reviews of your products or services before offering them on a wide scale. Have a test group or beta test so you can improve them before your real launch. This will give you a greater chance of success in your venture. It can help you avoid launching a product that is going to need major work in order to be a viable product."3

5. Make sure you have adequate insurance

Making sure you have adequate insurance to help protect you from any possible risk factors is perhaps the most direct, and one of the most effective, ways to manage risk.

As Donna Stone at Business Woman Media notes, "Although insurance doesn’t completely reduce risk, it helps small businesses by supporting them from taking the entire financial burden that is associated with either defective inventory or an employee who has been injured, and thus reduces the risk of the business folding."4

There are many types of business insurance to consider. Figure out which protections apply to your line of work and discuss your options with an insurance agent to get the right coverage.

6. Ensure you are meeting safety standards

Your insurance provider will likely want to know what kinds of safety precautions you have in place, and you may even get better rates depending on the quality of those safety measures. Making sure you provide a safer business environment can help prevent accidents. Not only can it help keep staff and clients/customers safe, it also reduces the chances of costly legal trouble. Have clear standards and policies in place to help protect everyone, including your business.

Nevada companies can get assistance with workplace safety from SCATS (Safety Consultation and Training Section), a division of the Nevada Department of Business and Industry. SCATS offers on-site consultation services designed to help employers recognize and control potential safety and health hazards at their workplaces, improve their safety and health programs, and assist in training employees.


Remember, if you aren't minimizing risk in your business, your company will constantly be in jeopardy, even if things seem to be going well on the surface. Take the time to manage risk and then stick to the strategy you put in place.

 

1.  https://www.score.org/resource/how-minimize-risk-your-business

2.  For an article on the basics of cash flow management, please visit https://nevadasmallbusiness.com/steps-to-cash-flow-management/

3. https://due.com/blog/entrepreneurs-can-reduce-financial-risks-new-business/

4. https://www.thebusinesswomanmedia.com/9-strategies-minimise-risk-business/

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank.

Nevada State Bank is a division of Zions Bancorporation, N.A. Member FDIC