Many businesses face closures because of one reason or another. According to United States Bureau of Labor Statistics, approximately 20 percent of newly opened businesses will close permanently within the first 24 months of operation. This is because owning and running a business is an inherently risky proposition. There are so many factors you have to keep an eye on if you want your business not just to survive but thrive in today’s economy.
The key to protecting your business from closure is understanding the numerous types of risks that could potentially threaten your enterprise. Below are the 5 major types of risks you must be prepared for if you want your business to become a success.
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Disaster Risks
Disaster can strike at any time, from devastating floods to ruinous tornadoes. Even if you have insurance policies in place, your business may still face immense loss. For starters, you have to close down your premises for repairs as well as see to the well-being of your employees. The loss of equipment and your workplace can prevent effective operations for weeks or even months.
The best way to avoid this type of risk is to analyze the likelihood of such risks affecting your business premises. Experts can give your workplace thorough fire risk assessments, flood proofing tips and similar ideas on how to protect your business from such hazards and disasters. You should also look up any relevant tips and advice from authorities.
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Security and Crime Risks
Crime can affect any business of any size. Small thefts like shoplifting can seem innocuous, but they can be very expensive in the long run for small businesses. Meanwhile, more dangerous crimes such as embezzlement and fraud can not only cost a business thousands if not millions of dollars, they also risk ruining your company’s reputation.
Security and crime risks can be answered by staying vigilant and putting protocols in place that address the most common forms of these crimes that threaten your business. Protocols can include background checks, frequent inventory and thorough bookkeeping, all of which can assure you that everything in above board.
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Digital Risks
People and businesses now exist in an increasingly digital environment, with more and more processes occurring online. Financial transactions are increasingly carried out over email and through software, inventory can be checked through apps and even sales can be conducted on digital shopping platforms. However, the digital horizon also contains many dangers for any business.
For one thing, there are sorts of criminal elements that could attempt to hack your business through the internet. There are safeguards like firewalls and antivirus software that can protect your information. Digital information is at risk from more mundane dangers as well. Simple loss of data can be just as devastating as a hacking attempt. Protect your data from loss by assiduously backing up all relevant information in off-site locations as well by uploading them into online platforms such as cloud sharing programs.
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Economic Risks
The economy is perhaps one of the most dangerous hazards any small business has to contend with. As other business owners who have survived through the recession of the late 2000s and the late 90s will tell you, the economy can quickly turn overnight. Such sudden drops in the economy can be disastrous as one industry knocks down another.
The best way to protect your enterprise from economic risk is by monitoring the economy. Whether you regularly consult with a financial expert or keep an eye on them yourself through the internet, your vigilance can give you enough forewarning. Diversifying your income flow will also be vital securing multiple safe sources of incomes in case the economy does tank.
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Compliance Risks
Businesses always have to face multiple compliance tests, no matter what type of industry they’re in. Restaurants and food related businesses have to complete health inspections, factories and similar enterprises must be proven safe for employees and the like. Meeting compliance policies is essential to ensuring your business can provide effective services and still be a safe environment for customers and employees.
Failure to meet compliance can be very damaging to businesses. First, you could face steep penalties from government or regulatory organizations. Second, you open yourself to lawsuits from customers and employers in case someone gets hurt or injured because of your lack of compliance.
Becoming a business owner is a risky endeavor that requires bravery and commitment. However, it also requires plenty of preparation and intelligence. Assessing the risks associated with running a business will be essential in ensuring your company survives.
