Risk is an inevitable part of starting and growing a business. It’s impossible to control everything, but there are many ways to limit internal and external threats to your company and its growth. One important resource to help you accomplish this is your business insurance provider.”Small businesses need to manage their growth to avert disruptions that can bring business to a grinding halt,” said Mike DeHetre, vice president of product development at Travelers. For example, “the theft of employee data, customer records, and product designs can destroy a small business, generating significant costs and eroding customer confidence and loyalty. Not every business owner’s policy covers data breaches or other cyber losses. Small businesses should be prepared by seeking insurance products that help them recover, including those that cover the cost of remediation and lawsuits.”As your small business grows, you may add space or equipment, create new products or services, or increase your operating and distribution footprint, so DeHetre recommends periodically reviewing your policy to ensure you have the right coverage.”It’s easy to forget this step amid rapid expansion, but you don’t want to find out that you’ve outgrown your coverage just when you need it the most,” he said.
How to Reduce Business Risk: Eight Simple Ways to Do It
From large corporations to small companies, all businesses face some kind of risk. Some business risks are minor and therefore easy to deal with. Some are more dangerous than others.Business risk management is a trend that many entrepreneurs swear by. Millions of dollars have been invested by companies on it. So far, business risk management works as long as owners and employees collaborate well.
1. Get insurance.
One of the best ways to reduce business risk is by getting insurance. Thanks to the thriving insurance industry, you can choose from many packages offered by different companies. Make sure that you do research to get the best deal though since some insurance agents might exaggerate their claims just to get your attention.Getting insurance allows you to protect your business when an accident or natural disaster happens. It also gives you peace of mind because you know that you have something to fall on in case your business hangs by a thread.An excellent insurance plan is something that protects your properties and employees. It also should have wide coverage.
2. Diversify your products or services.
Remember the expression – don’t put all of your eggs in one basket?Whether you are offering products, services, or both, diversifying your business offerings is a great idea. Not only does this help you offer more options to your customers, but it also helps you have various streams of income as well.Plus, diversifying your products or services help maintain the public’s interest in your company. It also can give you an edge over your competitors.So if your business only depends on one product or service, then it’s time for you to offer more. In addition, always make sure that every new product or service you release is of high quality.
3. Limit your business loan.
Business loans are just so attractive that many businesses always take them. They may provide you enough capital to launch or expand a business, but they pose risks to your business as well.If you cannot avoid getting a business loan, make sure that the one you’re getting is manageable and has the least interest. Compare plans from different banks beforehand, and make sure you can actually afford the monthly payments.And don’t forget, only apply for a loan if you really need it. Otherwise, just focus on marketing your business. By doing this, you can eliminate one financial risk and increase your sales.
4. Know the law.
Business regulations may vary from one state to another. Some states implement the Personal Property Securities (PPS) Act. The PPS Act aims to protect personal properties by creating the Personal Property Securities Register (PPSR). These personal properties include vehicles, equipment, patents, and shares, among others.If you buy, sell, or lease products or services, you must use the PPSR to record your transactions. Registering your properties under the PPSR allows you to reduce business risk by protecting your secured interest.Using the PPSR also allows you to check if the business equipment you’re about to buy is stolen or has an outstanding balance.
5. Document everything important.
Always document important transactions in your business such as sales, tax payments, and operations costs. It is also important for you to make sure that your employees are documenting everything properly from signing cheques to balancing the sheets. On top of that, managing your documents with minimal errors is a must.Doing so minimizes the risk of theft and fraud. It’s because documenting helps you track where your finances go. It also helps you identify whether your spending is actually appropriate or not. While it is true that many companies sometimes do not spend money wisely, you can still avoid it.