There is not a business on the planet that enjoys a risk-free existence. There are just far too many external variables that could upset the applecart, so to speak. But even though accepting risk is part and parcel of running a business, the most pressing risks also tend to be the most preventable ones, and that is exactly what we are going to address in this article.
Read on to learn about the most basic ways you can reduce the amount of risk your small business is exposed to.
Be Careful With Insurers
The whole point in using an insurance company is to mitigate the amount of risk you face. You pay a small premium in return for their assistance should an event unfold whereby you need their financial backing. It is the most obvious form of risk management.
Nonetheless, more and more businesses are learning that there are massive problems with their insurance contracts, leaving them exposed to big losses should anything happen, which is why we recommend you learn more about insurance here. With that said, there is one form of insurance that every business must absolutely get and that is general liability insurance, which will protect you from a wide range of potential lawsuits.
Use Better Contract Processes
In the same way, you get what you pay for with copywriting, you get what you pay for when it comes to legal advice. Basically, cheap is not the best idea. This means having a professional assist you with your contract procedures to make sure your contracts are tight and reliable. Additionally, both parties will know exactly what is covered in the contract, what the limitations are and what is expected.
So, whenever you are required to handover or sign a contract, make sure a lawyer reads through them too. What’s more, get someone who has experience working with small businesses and someone who can explain what the contract says in layman’s terms.
Options Are the Best Option
The biggest risk a small business has to contend with is their financial situation. That is why it is so important that you have options on the table. By allowing yourself this, you will be much more adaptable should a financial crisis arise. In an ideal world, having enough cash on hand to keep operating for at least three months would be best.
However, achieving this level of security is as unrealistic as scooping up the lottery. But that doesn’t mean there aren’t other options to explore. It could be that you reduce the risk by bringing on a partner that can add some capital, or it could be you overhaul your business structure so that your personal assets are not tied up in your business — a business failing is a tough pill to swallow, but it is far better than losing your business and your home. So consider your financial options and expand.
Yes, a small business is open to risk. But there are a lot of positives that shroud these waters, such as the money-saving insurance packages that you can now get, an improved level of awareness surrounding the risks, access to tried and tested procedures and advanced tools that can better control risk. Your job is to just adopt the right one for you.