It takes a lot of work, a lot of courage, and a lot of smarts to start a successful business. It also takes a lot of money. Whether it’s winning over customers, setting up a property, getting the software you need, or creating a brand, it all costs money to do it right. You need to see a return on those investments, so it’s important to be aware of the risks that might end up making them a waste of money.
If you’re in any kind of retail or manufacturing business, then you’re going to have to get used to the idea of inventory shrinkage, also known as loss. Your inventory is your bread and butter, essential to making money. But there are several ways that you can lose the investment on any one individual item. For instance, in manufacturing, loss caused by defective machinery or human errors have to constantly be fought through maintenance and thorough quality checks. The right environment for storage has to be considered, too, with moisture and heat causing potential degradation to your stock. Finally, there’s the real risk of theft, whether by employees or by supposed customers. Improving surveillance, using selective access to stock, conducting spot inventory audits, and using inventory tracking software can all work to reduce this kind of loss.
Wherever you start your business, whether it’s at home, a rented office, or an entire building, you have to be aware of the risks to that building. Thorough risk assessments should be carried out on the property. Looking at potential security issues, such as a need for door or window reinforcement and better locks, is just one concern. There are environmental concerns, too. For instance, air leaks can lead to problems like increased energy bills and you can click here for more information on how poorly-maintained roofs can lead to major damp and mold problems. Then there are all the concerns of the utilities such as plumbing and electrics that need to be assessed on a regular basis. Beyond the risk to the property itself and the costs involved in repairs and replacements for any damaged goods, there’s also the danger that these issues prove to your health and your employees.
Not only are you legally obliged to protect your employees’ rights, you are almost always the one who is going to pay when risks to them aren’t addressed. This is most true of workplace health and safety. Workers’ compensation costs can be drastically reduced by implementing a safety code and taking the time to regularly educate employees. You can even appoint someone within the business as a safety manager, making it their duty to ensure you’re complying with OSHA regulations. One of the other most common risks in the workplace is that of workplace harassment, bullying, and discrimination. You don’t have to participate, but you will be the one to get the blame if you have no effective HR channels and policies in place to allow for reporting and disciplinary action to tackle such cases.
Businesses deal with a lot of sensitive information. There are financial records, correspondence with banks/funders, personal information about employees, and even internal communication can be dangerous if it ends up in the wrong hands. Access to sensitive information has to be strictly controlled. Keep locks on any cabinets and make sure only those authorized to view or use that information have the keys. The same goes for password protecting any computers containing that information and using different levels of access amongst the staff to decide who gets to access what. Don’t skip using the shredder, either. Never throw out a full or only partially torn document. Read here for more information on business data protection. Businesses and customers alike get targeted by scams born from the wrong people acquiring the wrong information.
The cash flow
Naturally, you have to protect the cash, itself. The balance of your incomings and outgoings throughout the year is known as your cash flow, and there several problems that can threaten to disrupt it. Some of them are natural, such as seasonal highs and lows or changes in economic conditions that you can prepare to scale back for. Then there’s element of how you manage incoming cash. If using credit, you need to be able to establish a credit profile and choose the customers most likely to prove reliable payers. If you’re using invoices, then you need to automate them and send them off quickly, with payment agreements that ensure you’re not kept waiting too long for your money. It’s also worth identifying sources of credit for yourself, such as business loans and invoicing credit, to help you ride over any bumps.
Your brand costs money, too. Think of the designers and advertisers you pay, how much you spend on online marketing, and the time and effort that goes into making your customers happy. The brand is your reputation, and it can be damaged just as much as any other aspect of the business. Particularly in the online world, it’s easy for a disgruntled employee, customer, or even competitor to damage your reputation. You can, however, use reputation management services to ensure that any false or out-of-date information isn’t presented as fact, damaging the business image. It’s worth being proactive in tackling negative reviews with an aim to gain feedback and resolve issues. Recovering from a mistake publicly and even apologizing can be very beneficial to the brand in the long-term.
A customer puts a certain amount of trust in the business and you’re legally obliged to ensure that trust is met. If you fall into the pitfalls of inaccurate marketing and poor customer treatment, there’s a significant legal danger to the business as well. But the most prevalent risk to customers as of late is for those businesses using websites. If you request any personal information, passwords, or financial details, your site needs to be secured. Getting a high-quality SSL certificate can help protect that confidential information.
Every business is going to have its road bumps and you should expect that not every investment is going to pay off and not every risk is going to be avoided. However, being resilient and keeping an eye out for risks to the business is essential if you want to run a tight ship and turn a profit.