The importance of risk management for small businesses

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Owning a small business can be one of the most rewarding things you do in life. You’ve found a way to turn your passion into a profession, and you’re doing it on your own terms. That doesn’t mean it’s an easy ride however – in fact, 60% of new businesses go under within their first three years.

While there are many factors that influence the success of a business, effectively managing the risks your company faces could help to keep you on the right path. But with the day to day responsibilities of managing cash flow, looking after your team and servicing your customers, it can be easy for risk planning to fall by the wayside.

That’s where risk advisory professionals come in. Here are just three of the areas that a little outside help can support you as you plan for what’s ahead.

Credit risk   

Cash flow is vital in the running of any small business. Whether you’re looking to move into new markets, take on extra staff or open an account with a new customer, it’s important to put credit risk at the forefront of your business plan.

A risk consultant can help you to identify any threats that could interrupt or impact your cash flow - such as property losses or liability losses. They’ll then help you to determine the level of risk involved, and shore up your financial strategy to avoid entering a downward spiral.

IT infrastructure and cyber security

From customer information to internal systems and software, most companies will deal with technology or data in some way or another. With the ever-changing threats to cyber security and the increased importance placed on data privacy in light of 2018’s GDPR ruling, the costs of getting it wrong could be enough to put a small company out of business.

And yet at the same time, IT isn’t everyone’s strongpoint. A risk advisory firm can help you implement an infrastructure that will protect your company moving forward, and scale up or down as your needs and priorities change over time.

Resource

Even if you’re the kind of business owner that would prefer to handle everything yourself, you can’t be an expert in everything – and your time is important. Recruiting a risk consultant can take some of the pressure off while ensuring that important issues impacting your business receive the attention they deserve.

You may also only need this support on a short-term basis, so hiring a consultant is a great way to tap into the knowledge you need as and when you need it.

Have you got a solid risk management plan in place for your small business? Now is as good a time as ever – and engaging a third-party could be the best way to do it.