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RISK THERAPY 109
SMALL BUSINESS - THE MIRROR TEST
So you have a small business or an idea for one - where do you start and what must you have to keep the business thriving?
The most important ingredients for any business, and their significance, are as follows:
If you have these five items noted above then you have a business that you can manage or sell. How many of us can claim ownership of these elements in our business for any length of time? One could almost assess businesses and people using these criteria.
There are ‘nice to haves’ too, which you might deem essential to accelerate or boost business success in the early stages of development. These include:
The above nine items and many more besides, are not necessities and will develop over time if you attain business success; they will come to you.
In previous articles we’ve explored the many reasons why risk management is not practiced formally. Here are the principal and principle motivators for doing so:
Assuming that you are now thinking of using or augmenting your risk management practices, what should you seek to achieve?
Always remember business risks belong to you as the main shareholder(s). They are your responsibility and noone else’s. The 2008 Companies Act, due to be enacted in the third quarter of 2010, holds you personally liable for the consequences of your actions or inactions in your business.
Risk management books and degree courses refer to risk propensity (willingness to retain - adverse or tolerant?), propinquity (importance to you), severity, return frequencies and probabilities. In reality, most corporate risk managers regularly expend much time and energy identifying all sorts of potential hazards, then they ignore the majority of them as these risks are too remote or expensive to contain. It is worth mentioning that a good corporate risk manager always has a robust, comprehensive, tested Business Continuity Plan though, which is expected to respond to almost all triggers; take note.
Another lesson for all business owners, large and small, is that there is an almost unchanging set of strategic, structural or inherent risks; call them what you will. Whilst these don’t change quickly, our exposure to them does over time. The trick is find (and manage) your key risks before they find you. Contact us if you would like to discover, debate and mitigate the risks in your own profile.
One last point to consider. We tend to focus on external risks that have the potential to affect us. On occasion we elect to change our business structures or products and services, thereby exposing ourselves to internally generated risks. The impact of project cancellations and delays are considered into our plans. The distraction factor is often missed though. A change project takes on a life of its own and distracts us from our main business. Be aware of this in your planning.
Mirrors can be great teachers. Picture your business and reflect whether you would embrace the experience of being your own customer. Would you trust you to deliver on your business promises beyond this year? How long is your guarantee and what is it worth without risk management?
... “ART is an authorised Financial Services Provider”
Supplier of Risk Management services to the 2010 world cup South Africa
Paul Brightman - Alternative Risksmiths and Traders (Pty) Ltd. Short name - ART.
Cell : +2783 708 3634 Work : +2711 646 2777
11, Taylor Rd, Greenside, Johannesburg. Code: 2193.