Whether you’re running a small business or a large company, you’ve likely invested a lot of time, money and talent into trying to make it successful.
Yet many owners seem to forget that there are unforeseen circumstances that can stop your operations.
While we’d all love to have our businesses run according to plan, there are latent risks to every business, from physical damage to the business itself to data breaches, short- or long-term interruptions, personnel difficulties, and financial or economic risks.
For some businesses, these risks can be catastrophic. In fact, only 25% of businesses operate for over 15 years because of the risks that they couldn’t overcome.
However, the good news is that you can expect and prepare for many of these issues, which helps mitigate any potential risk. In doing so, you can not only save your company time and money, but your business can continue to thrive despite these obstacles.
The following are some of the most common business risks, and tips for preparing for and avoiding them.
Natural Disasters, Fire or Other Physical Catastrophes
Whether you are running your business out of a large storefront or in your own home, physical damage to your facilities or its contents is one of the largest risks you will face.
Robbery, fires, natural disasters such as flooding or tornadoes can all cause extensive damage in minutes. This can keep you from operating until you can find a new temporary facility, or it could destroy your entire inventory.
The best way to mitigate this risk is to protect your company with property, flood and business insurance. While insurance won’t keep you operating without interruption, it will protect your financial investment by paying for repairs or lost inventory.
It is also important that you keep an accurate and up-to-date inventory of your businesses’ furniture, supplies, and other property. This is essential to have when filing an insurance claim to ensure that you are fairly compensated in even of such disasters.
Data Security and Breaches
Regardless of whether your company is a sole proprietorship or a large corporation, data security is one of the top issues you’ll face.
Today’s modern businesses face the constant risk of data breaches, data theft or hacking that can shut an entire network down. In addition, your customers want to be sure that their data is in good hands.
Nothing harms a company’s reputation faster than customers having their data stolen.
One way that modern businesses are making their operations more secure is to use cloud business management services for storing files, data, and software.
Most big-name cloud computing services have the technological and financial resources to keep your business’ data safer and more secure than would be possible on your own private server.
Their track record of reliability and safety is extensive, making cloud business management one important way to reduce risk in business.
Interruptions to Your Supply, Network or Workflow
Nearly all of us have had the experience of moving along in our workday and having our productivity come to a grinding halt because of an unforeseen circumstance.
At the very least, power outages, a computer network crashing or phone lines being down can make it impossible to continue your workday.
It can also cost your business thousands of dollars in lost revenue and productivity.
The risk of short-term interruptions can be mitigated by having a backup plan that keeps your business going despite storms or utility outages.
Having gas-powered generators, emergency cell phones and both online and offline data systems for critical documents can keep your business moving forward despite temporary setbacks.
Sometimes, interruptions can be more long term, such as a recall or shortage with a supplier.
This risk might be more difficult to mitigate because you might not always be able to predict labor disputes, new tariffs or trade issues or recalls that might quickly interrupt your ability to meet demand.
Conducting regular risk assessments can help you predict potential supply issues ahead of time, allowing you to make a back-up plan for keeping a steady inventory.
Personnel Injury, Illness or Legal Trouble
It is likely that your employees are your company’s greatest asset. Without a strong team, your company would suffer in productivity, creativity, and innovation.
And while your human talent can propel your business into a great success, this also means that the risk of your employees being injured, sick or otherwise unable to work can place your company at risk.
If your employee, or even a customer, is injured at your facility, you could be on the hook for damages and legal fees associated with the injury.
Routinely inspecting your facility for hazards is an important step in preventing accidental injury.
If you don’t already have it, commercial general liability coverage can help protect your company’s assets if a legal claim is made against your company because of an injury.
You could also be at risk if your employees provide a service or advice to clients that were inaccurate or harmed the client.
When this happens, you may be responsible for any loss or damage experienced by your client.
Carrying liability insurance on your company and your employees can significantly mitigate this risk.
Economic Downturns and Market Troubles
Despite all of your preparations and risk management, your business is still likely dependent on economic and market situations.
A stock market crash, recession, depression or shaky and uncertain political climates can all have a significant impact on your business.
Taking the time to recession-proof your business is one of the best investments you can make.
Protecting your cash flow, continuing to market your business during tough financial times and focusing on maintaining your current customers can help your business thrive, even during significant economic downturns.
While starting and running a business can be a risky venture, with proper planning and preparation to mitigate these risks, the rewards can be beyond what you’ve ever imagined.
You may not prevent every problem but being prepared to cope with them can keep you moving forward towards successful entrepreneurship.
Armed with the knowledge to prevent and mitigate issues that come up, risks are merely necessary obstacles you can overcome along the path towards living your dream.
Ashley Wilson is a digital nomad writing about business and tech. She has been known to reference Harry Potter quotes in casual conversation and enjoys baking homemade treats for her husband and their two felines, Lady and Gaga. You can get in touch with Ashley via Twitter.