Small Businesses, generally, run on small margins. You are taking a major financial risk to operate your business on a day-to-day basis. What happens when business drops? Or your small margin becomes smaller and smaller?
We are currently seeing a number of small businesses closing their doors or struggling to make it due to Covid-19. Could some of these closures been avoided with a risk management plan? It's possible some could have avoided full-out closure. Reality is there will always be businesses walking the line between staying open and closing their doors.
So how can small businesses avoid waking the line? I believe it starts with the business plan. In my experience, business plans focus on the positive side but never consider the negative. What is your company's ability to handle risk? How much risk is acceptable? What are the major risks of being in your industry? Even if most business plans tackle these questions, they rarely go to the next level: what is the plan for each area risk?
When planning for risk, you have to understand you can not account for every detail. The goal is to have a general plan in place. Let's say you have a brick and mortar location and it catches fire. What do you do? You are probably have a plan to contact your insurance agent and landlord. Does your plan include contacting vendors? What about customers? Do you have a place where you keep backup information in case of an emergency?
Let's think back to margins, you know what your company's milestones. You know what you want to achieve. But what is the plan to make each milestone happen? What happens when you achieve the milestone but now business is failing? How did you plan to handle the downturn?
As I have gone on the journey to open my own business, I've consistently been told "the business will manifest itself" by multiple people in business. The meaning being don't worry about the what-ifs. If you focus on the positive, business will come to you. I'm here to tell you that does not happen. The company's who make it look easy, have built a solid foundation of how to handle the negative situations right along with the positive. My experience is business happens with careful thought and planning of what you can handle. Know your limits and how to overcome them. A key tool I use is SWOT (strength, weakness, opportunity, and threat) Strategy.
SWOT Strategy helps you to see some of the details of your business versus your competition. It also shows you how to leverage your potential. If you want to know how SWOT Strategy can help you plan, schedule an appointment with me. Let's discuss your business obstacles and goals, and how to move forward. Let's work together to make your business climb to new heights.