The Big Financial Risks Waiting To Take A Big Bite Of Your Business
Minimising business risk
Please note that the following post may contain some affiliate links:
Business is a risky game. It’s not just all about whether your investment is going to work out, either. You can have the best, most researched idea in the world with a whole new market just for you. There’s still a very rocky road ahead. However, there doesn’t have to be. You can just as easily smooth things out with all the right preparations. So we’re going to look at the big financial risks that you could find yourself easily avoiding.
Protecting your idea
A lot of what makes up your business are the ‘ideas’ that keep it going. By ideas, we mean intellectual property of all kinds. It can the product or service that you’re delivering. It can be the visual and written aspects of your branding. The fact is that these are all important ways of establishing a place for yourself in the market. So you need to protect them. Patenting and copywriting ensures that your bigger competition doesn’t try to steal them from you in a costly legal battle. Non-compete clauses in contracts for your employees cut any potential competition from your own staff, too. We don’t like to think that people we have worked with may care to steal our ideas or our customers. It’s an unfortunate truth of business, however. So make sure you’re using restrictive measures properly. Otherwise, you’ll be spending a lot fighting for your own ideas.
Protect your data
Then, behind the scenes, you have the systems that keep the business running. For most businesses, this relies on data like contacts, finances and customer details. Having these stolen is bad for your reputation, your business and perhaps even your legal standing. Failing to protect your customer data could get you on the wrong side of a lawsuit. A full cyber security protocol is a necessity for any business that wants to make sure they don’t lose any of their data to unauthorised access. This involves training your staff as well as making tech adjustments. Password security and making sure logged on computers aren’t left alone is important. Of course, so are things like anti-viruses, firewalls, and ethical hacking. But the fact is that you can’t just rely on great tech. You also need a bit of common sense.
Know your value
A lot of businesses fail in their finances because they don’t fully understand the value they might already be sitting on. For one, you should look at your physical assets. Is there any equipment you might be able to sell off if the situation calls for it? Do you have any spare space in your business premises that you could potentially rent out? Then there’s the possibility for further revenue streams that a business owner should consider. What services can you sell with your product? Is there a market for you to sell your expertise in things like webinars and talking opportunities? You should always have a few ideas on how to squeeze a bit more cash from the business in case things ever get tight.
Look after your employees
It should be no surprise that the staff of a business are one of the most common sources of lawsuits against that business. First, you should consider an arbitration clause so any complaints are dealt with without a lawsuit. Otherwise, it’s all about how you take care of your employees. They have rights you need to respect. The most commonly failed is the right to health & safety. If you’re not looking after their health, you’ll be spending a lot of money on worker’s compensation after. Then you need to make sure you have proper protocols to deal with harassment, discrimination, and termination. Otherwise, those topics can be a minefield for potential claims.
Expect the unexpected
Legal issues aren’t always the cause of a sudden loss of money in the business. Disasters, natural, man-made or otherwise, cost money. They do damage that needs to be repaired and destroy resources that need to be replaced. If all of that is coming out of your own pocket, then you could be in trouble. First, look at the cause of any damage. If it’s someone else’s responsibility, you may be able to get them to fork out the cash. Otherwise, it’s best to be prepared before the unexpected event. The right insurance policies can save you a lot of heartache down the line.
Do your damn accounting
You don’t need a huge disaster to lose a lot of money, however. Sometimes all you need is a bit of negligence. A lot of business owners get themselves in a bad situation by taking their eye off their finances. That can’t be you if you want to keep your money. From your funding sources to your invoices and payroll. Record everything going in and out of your business account. Ensure you keep that account separate from your personal account. Dipping too much into either can sink a business or business owner. Then make sure you’re paying the right amount of tax for the structure of your business. Otherwise, again, you might be facing some steep legal trouble.
Look to the future
One risk that not every business owner will recognise as a risk is the future. In particular, having a successful one. Yet failing to scale properly is a huge concern for startups. It’s the most common reason that they don’t make it past their second year. For example, you have to look at how you deal with the need for extra manpower. Instead of just pumping your business full of more people, you should consider restructuring how your staff operates. Some tasks might actually work worse with more people than better. Similarly, you should look into growing your marketing, customer support, and delivery systems. Having any one of them fall behind will cause a huge loss overall.
We hope that the above tips help you miss some of the bigger mistakes in running a business. There will be challenges, undoubtedly, but with the bigger ones out of the way, you have less to fear.
Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (email@example.com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.