When you own a company, numerous risks threaten to put you out of business or limit your ability to grow. Business managers must be smart about focusing on business risk and put in place tools, products, and strategies that minimise or eliminate risk. Some areas of business risk are obvious. Others not so much, but are just as risky.
Here are two that often get overlooked but can mean real danger for your company if not addressed.
Not Having the Right Insurance Coverage
Protecting your business is something you should take very seriously from day one. All kinds of risks can come to affect your company in unexpected ways. With a business insurance policy it is vital that you have it in place early and that the policy is comprehensive. This key word means that coverage will be provided in nearly all instances.
Too often, businesses will overlook key coverage or only get minimal coverage thinking that the risk is worth it. The truth, however, is that in the event of a catastrophe, the financial liability to your company will far outweigh whatever insurance premium costs you are paying. Carefully examine how you can make your business more successful and discuss insurance options with a reputable broker. Take that person’s advice about what your company and employees need. This process will not only get you covered properly, it will also make you feel safe and secure.
Losing Track of Expenses
Too many businesses have an incorrect idea of how they spend their money every month and rely on their bookkeeper or accounting firm to tell them long after the money has been spent. This is a recipe for waste. They certainly understand their structured items like rent, phone bills, salaries, and electricity. These bills are easy to determine because they either come to your business every month on in the case of salaries they are consistent.
But other items are not as clearly defined and often get underreported or misreported. One great example of this is expenses at your organisation. They get reported and are typically input at different times, and only when they are totalled do you realise what has been already spent. At that point there is no chance to dispute a bill or find ways to lower those costs. Without a strategy for containing these costs before they occur, you could be losing large sums of money each month.
If you have not done so, immediately implement strict company policies around expense spending. Set limits for everyone, tall them that they must utilise approved services only, which might include restaurants, hotels, airlines and rental cars where you have established discounts, and that there is a no-tolerance policy for expense mistakes.
You can decide the penalty but let everyone know there is one. Being loose with expense policies are notorious money waters. Getting control of them can mean the equivalent of finding a new income stream for your company.
Money for Things You Really Want
When you have a personal savings allowance, you put money aside for things that you really want. This might include a new car if the one you drive is constantly in the shop or even a danger to drive. It might mean attending an event that you really want to go to. It may be for a vacation that you have been dreaming of.
Or you might want to simply splurge on something because of your new good spending habits. The key is having the money in savings allows you to do something nice and special for yourself or someone else close to you.
Managing risk seems difficult, but a little focus on the topic and you will understand why it is important, and appreciate the step to dealing with it.
Leave a Reply