The owner of a small business is a person who works long hours, wears many hats and fights lots of fires. Its the nature of starting a small business. Sometimes strategic planning and goal setting is overlooked. But the very survival of that small business, means precious time and energy should be spent on strategizing how to keep expenses low and profits high. One way to keep expenses low, is to create a risk management plan.
Definition of Risk Management
Wikipedia defines Risk Management as: the identification, evaluation, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities. Whew.....
That's a fancy way to saying try to avoid a costly business expense, interruption or liability/property loss by:
1. identifying probable causes of a loss or business interruption.. and
2. apply resources to avoid that loss.
This in turn, may reduce the chances of paying an unnecessary expense.
Keeping Expenses Down is Very Important for Any Business
A small business' ability to keep expenses down and profits up is the essence of it's ability to stay in business. The Small Business Administration (SBA) is a wonderful resource for information.... for any business. They state that only 1/2 of all new business' will be around 5 years later. A business will close, if it's not profitable.
Important Risks Every Business Should Evaluate
- Natural Disasters - What impact they could have on company assets, continuing business operations and personnel ability to continue working through the recovery period.
- Health and Safety of Employees - Employees are lifeblood of every small business. Their ability to be productive at work effects the profitability of every business
- Non-Compliance with State and Federal Regulations - Penalties and fees can add up quickly. Make sure your business is compliant with new consumer data privacy laws, health and safety laws, taxation laws etc. Remember, these laws are subject to change at any time.
- Security and Cyber Risks - Property theft of business property, business data, customer data, extorsion and fraud are on the rise. Beware, thieves are getting smarter everyday!
- Economic and Financial Risks - Cashflow, the possibility of an economic downturn, a decrease in the ability to hire competent staff are all extremely important components of the financial health of a company
- Changes in Technology - The sudden loss of a competitive edge due to the rapid changes in technology and quickly stall the growth of any small business. Uber has eliminated the taxi business in many cities in just a few years.
- Utility Services - If interrupted or unavailable can greatly hurt the profitability of a company.
f you are a small business owner and want to increase your profitability in 2019, remember to make Risk Management a part of your strategic planning for the upcoming year.
Call one of our licensed agents at Denver West Insurance Brokers, we can help mitigate business losses due to natural disasters, accidents, cyber and security Risks. Our local office is in Golden, CO. We serve the cities of Denver, Lakewood, Arvada, Wheat Ridge, Littleton, Morrison, Evergreen, surrounding mountain communities and the entire state of Colorado.