Risks are part of life – fact – and sadly it’s impossible to remove all of them when running a business. But, they can be managed in the context of an organisation.
In our “For Love or Money” campaign*, which we conducted to get underneath the skin of UK entrepreneurs to understand what really motivates them, we explore and uncover many uncomfortable home truths.
They include business owners’ attitude to risk management, which features very highly. Most worrying of all is the fact that business owners are adopting an “all eggs in one basket” approach by investing heavily in their business but at the same relying too much on a few key stakeholders. More than two-fifths (43%) confess to having a single major customer that they couldn’t live without, while over a third (36%) admit their biggest customer generates more than 40% of their monthly revenue.
The range of risks that business owners face is vast and hence considering your broader exposure to certain business sizes, specific sectors or different markets is important. Your customer landscape may well have changed dramatically since you started up, and is still evolving, perhaps even quicker than before.
To help cover all the bases, we suggest that our clients first assess their own businesses so that they can really analyse their critical activities, including key services so that they have a clear view of the areas that they couldn’t operate without. Having a comprehensive business plan can make this process easier, but above all ask as many “what if” questions as you can. Once you’ve identified the risks, analyse the likelihood and consequences of them occurring and then come up with options for managing them.
For example how would your business cope if a key member of staff decided to leave or you became sick or even had to take time off suddenly to look after your family for a period of weeks or even months?
As a leader, as well as an owner, it’s primarily your responsibility to consider these angles, and therefore finding the time to think as well as “do” is of paramount importance. So to all business owners out there - take time to look in the mirror and question your approach and your subsequent decisions.
*The Haines Watts Research is based on interviews with 514 owners of UK businesses, which are at least two years old, have a turnover of between £1 million and £50 million and have between 10 and 249 employees.
The study was conducted in 2016. The survey findings can be found at: https://www.hwca.com/for-love-or-money/
Jane Gregory, Head of Client Services, Godalming
T: 01483 425724
Surrey offices in Godalming and Esher