Whether you’ve launched a small business, partnered in someone else’s, or are just thinking about the next steps for a new career venture, it’s important to remember that everything you do comes with risk. While this can sound scary, it’s not meant to be intimidating! Knowing tips for mitigating risk as a small business owner is critical for avoiding mishaps and creating an effective risk-management plan.
Here are some tips:
1. Personalize Your Business Insurance
In many cases, the cookie-cutter insurance plans companies offer business owners don’t align with specific situations or risks. Therefore, it’s a good idea to personalize your plan. Review insurance packages and add special coverage depending on your industry.
For example, you may want to cover employee health insurance because your employees are your greatest asset, or you want cyber liability insurance because you manage sales online. If you’re like me and offer in-person tutoring, learning, and classes, making sure there’s a special clause for household pets is important, too!
2. Consider External Factors
Thinking about external factors is important for mitigating risk as a small business owner. In terms of profit, you rely on customers to purchase items or services from your establishment. However, market trends and consumer demands play significant roles in the business. Recently, inflation has become an increasing concern for many people.
When everyone is trying to cut back on extra expenses, small business owners may experience a decrease in sales. Low profits can affect workers and the owner. That’s why it’s important to pay attention to external factors.
3. Prioritize Risks and Threats
List all risks and threats on a scale of “most likely to happen” to “least likely to happen” while creating a risk management plan. For situations that are likely to occur, create a plan that mitigates potential issues. For instance, if you own a restaurant, you should have a plan for if a customer complains about the food and doesn’t want to pay for the meal.
4. Create Solid Action Plans
Being proactive during times of trouble will help you navigate business issues. Think of different scenarios and create an action plan to resolve the problem. For example, the first thing you should do if you get an EDD audit is contact an EDD lawyer. California’s Employment Development Department manages state payroll taxes. Inaccurate tax documents put you at risk for an audit and investigation. However, staying ahead of the situation and gathering a solid legal team will help!