Top 5 Ways To Put Your Business At Risk
How to Put Your Business At Risk
and what to do about it
As a small business owner, you face unique risks that larger companies don't. Smaller businesses often lack resources, which means they're less likely to know about requirements and best practices that the market dictates, and less likely to be aware of risks and even more so, how to mitigate against them. These are 5 areas of small business that owners like yourself can easily and unknowingly be at risk for.
If you don't document systems and processes early and often enough, you'll find yourself scrambling when something goes wrong. This means that you won't have a clear picture of how things work, making it difficult to identify potential issues before they become major problems. Also, it will make training a hell of a lot harder when you get to hiring people to take over your responsibilities
What to do about it: A real business broken down to its essential parts is nothing but systems and processes executed by people. When you are able to think critically about what makes you and your business successful, make sure you are taking time WEEKLY to write, re-write, and improve those processes. Your future self will thank you.
A lot of business owners think that being an owner means having complete control over every aspect of your company. In fact, it's more likely that you're going to need help from other employees or outside contractors. As an owner, you should never rely solely on yourself to do everything. You will need to hire people who can help you with tasks that you aren't good at, or you don't like. This is constantly the leading reason businesses are unable to sell - too much reliance on the owner themself.
What to do about it: As an owner, you need to recognize that your business can only grow into an asset if you are able to get other people working for you. This means you need to master the skills of hiring, onboarding, training, leadership, and retention. A lot of this has to do with the process, maybe, even more, has to do with your own ability to interact with people. Make sure you are always working on these factors, or continue to be an overworked employee of your business.
We know too many business owners that have fallen victim to this risk. When you get started on your business owner journey, there is a high potential for you to come across a company that demands a lot from you and will pay a hefty price to get it from you. After a while, this company demands so much attention, you could likely spend over half of your working time on this one customer. Then, boom! that customer breaks up with you, and you lose half your business (or more) overnight. This is actually a way too common story, and it is the reason why a lot of businesses are seen as too risky to invest in.
What to do about it: It may sound counterintuitive, but if you find yourself in this situation you should likely look to downsize that large client. Whether this comes through specializing down to a specific set of products/services or maybe even just referring out certain asks from your customer, it will behoove you in the long run to make an effort to get all of your customers below 15% of overall revenue. This way, if one leaves, it's not a big hit, and you are seen as a "less risky" business.
If you own a small business, chances are good that you rely heavily on one employee. That employee could leave unexpectedly, become ill, or even die. No business owner expects this to happen, but it does. When you hire your first and even your second employee, chances are they are a rockstar. A true A-player. This means that you likely ask more of them, and they are also capable of doing more. Over time, this causes that employee to do more than what they were hired on to do, and thus wear "many hats." If any of the aforementioned things happen to this employee, your business will suffer greatly.
What do to about it: It is certainly a struggle to make sure this employee does not take on more than what you hired them to do, but you have to be disciplined by not asking too much of this employee. when you have 2, 3, or more working for you, make sure you are cross-training. When needs arise, make sure you are not just dumping on responsibilities that do not align with that employee's role. Wait until there is enough work to be taken over by a contractor, part-time employee, or even a full-time employee.
If your company culture isn't adaptive to change, then you're putting your business at risk. This means that your employees won't adapt to new ways of doing things, and your customers will stop trusting you. In small businesses, it is essential for your staff to understand things move quickly, and they need to be receptive to quick changes. They need to be advocates of change - embrace it. When you hire employees that do not understand this, your company will surely become stagnant, and you may not understand why.
What to do about it: When you are hiring people, culture fit should be your number one concern. These people should understand the work environment they are coming into, and know that systems and processes have the potential to change quickly. For instance, you may change CRM systems at a moment's notice because of functionality or pricing, the same thing with payroll. You as the owner should always be looking at ways to improve marketing messaging and sales processes. When you have the right people on your ship, these changes will not bother them, and you will grow exponentially.
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