19 Jun Mid-Year Business Review: Risk Management Edition
Original article from https://smallbiztrends.com
By Ted Devine
For small-business owners, conducting a mid-year check-in is an essential part of staying on track for meeting annual revenue and growth goals. But a mid-year review can also be an effective risk-management tool to help keep your business safe from the various forces that can throw it off track.
Below are key questions to include in your business review to ensure that you’re adequately managing the risks that affect your business.
Business Review: Risk Management Questions
As with any mid-year review, half the battle is setting aside time to analyze your business and develop an action plan for items you need to work on. Get serious about latter portion of 2013 by setting aside a half day in the coming weeks to spend analyzing the current state of your company. When you do, take the time to consider these questions that focus on risk management.
Are your taxes on track?
In mid June, your second installment of estimated quarterly taxes is due. But if your revenue has increased since your initial projections, your tax liability might have changed, too. To make sure you don’t incur underpayment penalties, take time during your mid-year check-in to reexamine your calculations.
Dedicating a few minutes to crunching these numbers has the potential to save you time, energy, and unnecessary penalties when you’re filing your taxes next year.
How safe are your business premises?
A quick safety audit of your business premises will alert you to any hazards that could lead to property damage, bodily injury, or lawsuits for the people you serve and employ. Check batteries in smoke and carbon monoxide detectors, verify that furniture and decorative items are secure and unlikely to cause accidents, and make sure that light fixtures provide adequate illumination.
A little preventative work now can save you from a customer injury that leads to a costly lawsuit down the road.
Are you inviting a data breach?
These days, it’s almost impossible to run a business without handling client data of some kind. And if you have access to customer information, you’re at risk for having it compromised in a data breach. Minimizing your chances of being victimized requires a multi-pronged approach: Encrypt data, use strong passwords, change your passwords regularly, limit employee access to sensitive data, install antivirus software on your machines, and invest in a Cyber Liability Insurance policy that will cover your costs if and when a data breach does happen.
Small businesses are big targets and if you’ve skipped one or more of these steps, there’s no better time than the present to put protective measures in place.
Do you have policies in place for avoiding client lawsuits?
In many cases, client lawsuits are triggered not by sloppy or incomplete work but by clients who feel as if their needs haven’t been met or their concerns haven’t been addressed. One way to minimize the likelihood of dissatisfied clients is to institute a check-in strategy that includes communication during all phases of a project. Having a standard policy for touching base allows you to identify areas of concern and address problems when they’re small. Without such a policy, you’ll likely only hear about problems when they’ve escalated and are harder and more time-consuming to deal with.
Your communication system doesn’t have to be complicated: Even pre-written emails sent at specific stages in your projects can work by demonstrating to your clients that you’re thinking about them and available to address their concerns.
Do you know what your competitors are up to?
It’s never fun to be blindsided by a disruptive innovation from one of your biggest rivals. A new, out-of-the-blue product or service launch by one of your rivals can hurt both your credibility and your revenue. During your mid-year review, set aside some time to research your competition (and develop a schedule for doing this on a regular basis if you aren’t already).
At worst, you’ll find out about an upcoming challenge sooner than you might have; at best, you’ll get some great ideas you can adapt for your own business.
When did you last update your emergency or disaster plan?
Hurricane Sandy served as an unpleasant reminder about how serious weather events can affect small businesses. But now that the “Super Storm” has faded from headlines, the urgency behind disaster management plans has also sputtered. If you don’t have a plan in place for what you’ll do in the event of a tornado, hurricane, flood, earthquake, fire or power outage, take some time to sketch out the details.
Remember to include plans for contacting your employees, saving or preserving your inventory, and financing your ongoing business expenses if your revenue is disrupted. (Business Interruption Insurance might be able to help with the latter.)
Do your insurance policies protect you against the risks you currently face?
Finally, take a look at the limits and exclusions on your Business Liability Insurance policies. If you haven’t updated them in six months or more and have experienced any business changes in that time (e.g., moving to a new building, increasing revenue, offering new services or products, hiring new employees, etc.), there’s a good chance that your policies don’t fully cover you. A brief phone call to your insurance agent should clarify whether you need an update to your insurance policies.
Risk Management as Part of Revenue Growth
It’s all too easy to treat risk management as an afterthought while focusing primarily on more traditional revenue-boosting measures. In reality, though, a robust risk management plan is essential to maintaining steady revenue increases. After all, nothing drains a business’s assets faster than an unexpected catastrophe or disaster that demands large-scale repairs or a lawsuit that requires extensive time and money to defend.
If you’re having trouble finding time to update your risk management plan, think of it as one of the safeguards you put in place to shield the revenue you’ve worked so hard to earn. Take some advice from Ben Franklin, the owner of several small businesses:
[colored_box color=”blue”]“An ounce of prevention is worth a pound of cure”[/colored_box]