As a business owner, decision-making is your responsibility. While some decisions are straightforward, others, like investing in technology or bringing on an investor, require more time and thought. It's crucial to have effective processes in place for making these high-risk decisions, ensuring a smoothly functioning business.
Here are six strategies to successfully manage and minimize risks in your small business.
Monitor your cash flow closely
Issues with cash flow management don’t pop up out of the blue; they originate from long-term mismanagement or the business owners’ attention being on other priorities. Keeping a close eye on your cash flow ensures you’re abreast of your financial situation and enables you to analyze issues and mitigate potential pitfalls if income streams disappear.
For many business owners, spending hours in the books isn’t feasible with the litany of other responsibilities on their plate — and that’s OK. However, if you’re unable to take stock monthly of your financial situation and monitor cash flow yourself, it’s time to find a reliable accountant. Your accountant can take responsibility for bookkeeping, cash flow management, payroll, and even your small business’s taxes when the time comes.
[Read more: How to Create a Cash Flow Statement to Keep Track of Your Business Finances]
Establish a cybersecurity policy
Many small businesses often believe they won’t be the target of cyberattacks, resulting in a majority of small businesses (51%) failing to have a digital defense plan in place to protect their customers and intellectual property.
Significant business is done over the web in today’s landscape, and small businesses should establish a cybersecurity policy to protect themselves and their customers’ data. Consider consulting with a data privacy professional to understand the needs of your infrastructure and hit baseline necessities, like password management and a process for updating software. Mitigate the risk cyberattacks pose by developing an airtight security policy.
[Read more: Newly Remote Workforce? Take These 4 Cybersecurity Steps Now]
One major way to track your online reputation as a business is to read and respond to every review your business gets.
Create a risk management plan and team
Whether you’re able to use in-house employees or hire an outside firm, creating a risk management team affords your business the advantage of having processes in place. Instead of scrambling for answers when a risk goes awry, your team has adequate training to assess the situation, minimize the damage, and take action based on their skill sets.
Relying on an outside firm might cost more capital than an in-house team, but they’ll bring deep knowledge and experience to the table — mapping out risks, implementing strategies for recovery, and lending support if and when it’s needed because it is their only job function.
[Read more: 4 Simple and Easy-to-Deploy Ways to Protect Your Company Data]
Implement proper insurance coverage and risk transfer
Assessing your insurance needs and liability ensures you’re covered in the event a risk goes wrong. You can further reduce the risks of having significant payouts by buying more coverage or additional insurance plans. At the very least, ensure your insurance covers any inventory, employees, equipment, and miscellaneous property or vehicles.
Avoid long-term commitments
Long-term financial commitments may seem like a good idea at first, but they can decimate your cash on hand after a bad month or two.
Try to stay away from long-term financial commitments like company car leases or hefty mortgages to minimize the risk of your small business. Instead, opt for smaller, bite-sized payments you can handle while continuing to get your business up and running. Consider renting a storefront or having a virtual office rather than buying office space. If your employees drive a lot, organize an easy gas mileage reimbursement program rather than buying a fleet of company cars.
Track your online reputation
The vast majority of consumers trust online reviews as much as personal recommendations, according to BrightLocal. As such, small businesses have the opportunity to attract more customers and build deeper loyalty by curating a transparent online presence. From reviews to ratings to user-generated content, keeping an eye on what people say about your business online has never been more accessible — or more overwhelming.
One major way to track your online reputation as a business is to read and respond to every review your business gets. These responses should remain professional and in the voice of your brand. Because they’re public, reviewing responses on search engines and social media offers potential customers a window into how you do business.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
