The Forms of Business Risks and Practical Ways of Managing Them

Business risks are the likely dangers that a business enterprise may encounter if preventive measures or safety precautions are not put in place to avoid them. When an enterprise experiences a particular business risk, the entrepreneur should not point finger at witches, ghosts or enemies. They happen as a result of poor planning and failure to set out measures in managing these risks. There are two main types of risks that a business enterprise is likely to face.

These are Direct risks and Indirect Risks.

1. Direct risks- This is a type of business risk that could entirely collapse a business enterprise. They directly affect the enterprise and halts down all of its business activities. Due to the severity of direct risks, entrepreneurs should set out preventive measures of curtailing them. Examples of direct risks include theft, fire, bankruptcy, misuse of capital through irresponsible expenses etc.

2. Indirect risks- This type of business risk slowly causes the collapse of the enterprise. If extreme care is not taken, it can be hidden from entrepreneurs. Like a slow poison, indirect risks if left unchecked can ruin a business enterprise. They are quite difficult to control and account for greater portion of business losses. Examples of indirect risks are lack of sales due to faulty or low quality products, wrong business locations, currency inflation, introduction of new taxes, changes in labour laws etc.

Business risks whether direct or indirect can be managed or controlled. The entrepreneur should be very vigilant and alert in his supervisory role. There should be regular or routine check of stocks and finished products. Only the entrepreneur cannot do this work. An accountant or book keeper should be employed and assigned to check the accounts of the business every month or even daily depending on the size of the enterprise or the rate of purchase of products.

Also, the entrepreneur has to increase vigilance and security by beaming up the security such as employing security personnel and installing security devices. These measures would help minimize or entirely stop the cases of theft.

Most of the fire outbreaks that occur in the enterprises are as a result of faulty electrical connections and appliances. The entrepreneur must employ a qualified electrician to do all the electrical connections or wiring in the enterprise. He has to replace all weak or faulty wires and other electrical appliances to avoid the likelihood of fire outbreak.

Low sales and patronage of the products of an enterprise can be as a result of several factors. Paramount among these is due to the low quality nature of the products and wrong business location. The entrepreneur must undertake training for his staff members while constantly checking for product quality. He has to use quality and durable materials for the manufacture of his products. Furthermore, if wrong business location is causing the drop in sales of products, the entrepreneur should relocate the business to a more promising area where there would be high patronage for his products.

Inflation and constant changes in labour laws can affect the success of a business enterprise. An entrepreneur should be always alert to these changes. He can do this by keeping in touch with the relevant ministries to know what new changes have been planned that may affect one’s business.

It takes a great deal of time and efforts for entrepreneurs to set up enterprises. Owing to this, they must vigilantly guard against any internal or external dangers that might result in their collapse. Identifying and controlling potential threats to businesses is the guaranteed way to succeed.

Cloud Backup Is Necessary in Today’s Changing Business Landscape

The world is changing at light speed. Information which once required a large warehouse to store data can now be kept on devices smaller than a fingernail. Technology has caused nearly all businesses to keep their data in a computer or online.

Sadly, the ability to store things electronically also makes it easier to corrupt or steal. The saying, beggars can’t be choosers has never rung truer than today. No one and no business is safe from attack.

Hospitals, small businesses, retailers the government, all of them have had hackers try (sometimes successfully) to gain information. Additionally, sometimes the thieves will destroy or corrupt the data making it nearly impossible to resume normal operations until the flaw is discovered and fixed.

Sadly, some businesses cannot rebound from an attack. An attack can cause customers to lose faith in the company’s security or prevent it from returning to regular operations in a timely manner. In real life, time is money and people would be surprised to learn how easy it is for a successful business to go under in the blink of an eye.

This is why the ability to recover secure data during a massive security breach or other disaster is a must. Some small business owners believe that they do not need a cloud backup service because they are expensive and only large corporations require large amounts of information to be stored.

That is an incorrect and potentially dangerous way of thinking. Small business owners are the main ones requiring a secure backup for their business. Many of these business owners rely on their company as their sole means of income. One major issue and the whole business could go under.

Cloud services are not expensive and one can purchase a package for as little as a few pounds. The smart business owner knows that their business is only as good as long as operations are running smoothly, thus he or she includes a secure backup service in the company budget and business plan.

Truthfully, the backup plan should be included in no fewer than two business plans. The first one should be the aforementioned business budget and the second should be in the emergency plan.

When emergencies happen, employees can be cut off from one another, documents and supplies destroyed and operations cease to continue. This can be the death knell for many a business if they do not have a plan to overcome any obstacles.

This means they should have at least two people who are authorised to retrieve the company’s data. They should have the ability to set up a temporary office where the retrieval can be made as well as a system for resuming operations during a crisis.

Cloud backup systems are necessary because the technological age requires us to have a means of retrieving data. When businesses can be destroyed by a few clicks of a mouse, then business owners (and people) should take any means necessary to protect their data.

Two main things occur when a company announces a data breach. One, the customers and clients lose faith in the business and two, operations are hindered until everything can be restores back to normal. A loss of customers and ceasing operations can ruin a business in a week.

Not using a reliable and safe backup and retrieval service is one of the biggest mistakes a company can make. Only one thing is certain with today’s technology; there will come a time when data is erased, breached or destroyed.

Being able to restore everything as it was before is not a luxury but a right. There are too many employees and customers counting on the business to be secure, trustworthy and adept at their services in order to have the longevity that all the best businesses need to survive.

Earthquake Preparedness Month Inspires Public Service Campaign for Business Continuation

Earthquake Is Overdue

Here in the earthquake country of Southern California, the “big one” is now more than 20 years overdue.

And the best estimates indicate that if it hit today, 25-50% of small businesses would not survive.

The impact of the failure of a small business – or any business, for that matter – is felt widely. Even if no people are harmed physically, when disaster hits and a business fails,

  • Clients lose their source of products or services.
  • Suppliers and professional advisors lose a customer.
  • Employees are suddenly without any income.

The owner, of course, loses the asset, perhaps his reputation, and the future that the business promised.

Lack of Planning Dooms Businesses

Statistics on surviving a disaster are only estimates, because some businesses hang on for weeks or months after the emergency before they go under.

But research indicates that two factors play a significant role in determining the chances of survival.

  1. Lack of a suitable plan. A good plan anticipates potential threats, identifies essential functions, and lets employees know what is expected of them in the case of business interruption. A Gartner poll (2009) reported that only 35 % of small businesses had a comprehensive plan in place. Moreover, many plans overlook the key element of communications DURING and AFTER the disaster, when phone lines and electricity are out.
  2. Lack of practicing the plan. A thick plan on the shelf serves no purpose and may even give people a false sense of security. People need to know what has to be done to keep the business alive – and they need to know they can actually do it. A Harris poll of over 2000 working adults found that three-quarters of them said that their company had not conducted any emergency drills.

In the face of doubt or ambiguity, the first instinct of employees will be to abandon the workplace to get home to their families — leaving the business to its fate.

Missing Pieces Campaign

What is the solution? One way to improve the odds is to have business leaders take the initiative in sharing business continuation planning information with their own customers and suppliers.

A “Missing Pieces” campaign focuses on shortcomings of Business Continuation Planning as mentioned above. Selected business are mailed a letter laying out the issue and offering a free package of materials that they can use for themselves and forward to business connections.

Basing the message on existing relationships adds urgency and credibility to the campaign – and gives everyone a better chance of ensuring that the company can stay alive following a disaster.