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Where possible reduce your risk and grow your small business

You might have heard the expression that success does not come without taking some risks. Yes, this can be true. However, that doesn’t mean that you have to be taking unnecessary risks with your business and there are things that you can do to limit the amount of risk that you take here. Don’t get us wrong, we know that taking risks can lead to big payoffs, but that doesn’t mean that you shouldn’t protect what you already have. Let’s look at some of the things that you can do to reduce the amount of risk that you are taking with your business.

Insurance

Insurance will save you from financial disaster in your company. With insurance, you can guarantee that if your business is exposed to an unforeseen setback like a fire or a robbery and is hit with a costly bill, you will survive and potentially, thrive on the market (if you have the right cover in place). One example of this would be workers compensation insurance. Workers compensation insurance will mean that if an employee is injured on the job, in your office or business property they can get the compensation they need without it coming out of your pocket. Instead, the insurance provider will pay up which is crucial, particularly when you see how high the bills for business injuries can be. Damages for this type of personal injury lawsuit can be as high as five hundred thousand dollars! That is more than enough to cripple even an average sized company.

There are actually various types of insurance coverage you can get for your business. And, when it comes to insurance less is more might not be the best advice. You should be getting as many types of coverage as will fit into your business budget. Many business owners, particularly young startups avoid insurance, disregarding it as for the worst case scenario. However, you would be amazed how often the worst case scenario comes to fruition.

If you are trying to do most of the work for your startup yourself then it might be an idea to consider key man insurance. Key man (or key person) insurance will cover you if something happens to the main driver of the business. Talk to your insurance broker to find out more about what is covered and what you need to do to put it in place.

Save/keep a cashflow buffer

One thing that you should always be doing is saving some money for a rainy day. You might be wondering whether you need to save if you have insurance. You should always aim to have some money locked away even with an insurance coverage plan. You’ll probably find even the best insurance won’t cover all of the most expensive costs.

Make sure you are saving as much as you can and think of this as an extra type of insurance incase something drastic happens to your company. Remember, it’s better to have this money for if you need it than to spend it and leave yourself short if something bad happens.

This will mean that you have to focus on the finances of your business. If you don’t think that you are in the position to do this, you should think about improving your personal finances before you start a business. If you have a business, but you don’t have an emergency fund, you are setting yourself up for a hard time at some point down the line.

Succession Plans

You might have heard about how governments plan for successors to fill roles that are left vacant. This could be due to an employee or colleague retiring, leaving the business or even being fired. Succession plans are crucial for key roles in your business that must be filled without delay. Failure to do this could bring your business to a grinding halt.

When you have a fast growing startup it is very likely that your key people are going to grow with the business, ie your operations worker may become your operations manager in 6 months and then become the operations director in 12 months after that. Given that these roles may be totally new it will leave a whole where that person has come from. If you don't think about succession planning early you will potentailly leave your business vulnerable as it grows.

When you are creating a plan like this, it’s important to look at the positions in questions and lay out a clear concept of what an individual needs to be to fill that role. Think about the traits they must have and the experience they need. By doing this, you will find it far easier to fill the role with someone who is potentially already in your business when the time does arise.

Disaster Recovery

A Disaster recovery plan is a way to make sure your business can continue in the wake of a, you guessed it, disaster. This type of disaster could be anything though these days, it is commonly associated with a tech crisis. For instance, you might find that your computer systems crash. If that’s the case, you could lose a mass amount of data. You might even find that a tech failure could impact your finances in serious ways, potentially crippling your company and making it impossible for you to break even. This is definitely a problem but how do you fix it?

A disaster recovery plan relating to tech will usually include a backup system. Using a backup system, you can have your servers back up in minutes. Without this, type of system, it will take days or even months for a business to recover on a technical level. As such, on a technical level a backup server should certainly be part of your disaster recovery plan.

However, a disaster recovery plan can also involve documents, data and procedures that you and managers can use to get the business back on track. You’ll find that there are various companies who can help you set plans like this up and make sure you have the systems that you need.

Hire A Legal Advisor

Finally, do make sure that you hire a legal advisor in your business. You probably think that there is no way you would cross the line in your company and participate in illegal activities. We’re sure you wouldn’t commit a crime or fail to remain compliant with regulations on purpose. However, it is important to realise that laws and regulations change on what is virtually a daily basis. As such, it can be difficult for the typical business owner to keep track.

A legal advisor can help here and make sure that you are kept up to date in areas that are crucial such as the regulation of customer data. This should help you avoid the potential massive lawsuit that could come your way if you do fail to remain compliant in the necessary areas.

In Conclusion

A fast growing business will create some amazing positives but there may well be some negatives along the way. To mitigate the risk of these negative events there are a number of things that you can do, we have identified 5 ways that you can mitigate some of that risk. If you are an entrepreneur ad you are looking at setting up a startup we would suggest that you seek professional advice up front to try to identify the potential risks that you could be up against.