How to Mitigate Uncertainty Risk in Your Small Business

There is no such thing as a risk-free business. In a perfect world, all business ventures would bring nothing but success. However, the world we live in is far from perfect and even the best laid business plans can fail. There is risk in every business. Some can be planned for and avoided, while others rush out you with the speed and ferocity of a tsunami. There are things you can do, though, that will help you build your own breakers to reduce the impact of those rough waters and potential tidal waves.

Identify Likely Risks

Depending on where your business is located, some risks are more likely than others are. Some business owners are so focused on the financial risks of operating a business on the business side (failed products, too much competition, not enough advertising, etc.) that they overlook the equally dangerous, and often more likely physical risks of operating businesses in their location.

For instance, some parts of the country are at greater risks for fire while others are likely to fall victim to floodwaters, tornadoes, and other weather-related risks). They can all prove equally damaging to the health and longevity of your business. You simply need to identify the most likely risks your business faces.

Generate Plans to Minimize those Risks

It’s important to plan for caution once you’ve identified the major risks facing your business. For instance, restaurants and nightclubs, which have greater fire risks than other businesses need to have adequate plans in place to limit those risks. Things like policies for pyrotechnics, kitchen safety protocols, and strict no-smoking policies can make a huge difference in the risk of fire for the business.

You’ll have to tailor the plans to the specific risks your business faces and come up with plans and protocols that make those risks as small as possible while continuing to allow your business to operate.

Establish Protocols for Dealing with Risky Situations if They Do Occur

This is a two-fold process. First, you need a protocol for dealing with emergency situations in the moment. If it’s a fire, you need a plan for getting employees and guests out of the building safely. You should conduct regular drills, educate employees on their roles in the emergencies, and provide them with the tools they need to weather the storms safely for their sakes and the sake of your business.

The second part of the process is to create protocols for dealing with the aftermath. Risk happens. It’s part of doing business. Whether it’s hurricanes, financial disaster, electronic breaches, or whatever, you must have a plan in place for dealing with the aftermath. Once again, every employee needs to understand his or her role or responsibility and you must be prepared to protect your customers, and their information, to the best of your ability as a business owner.

With these things in mind, the other important point to remember is this: no matter how many steps you take to mitigate risk, there is always risk in business. The most important thing you can do, besides mitigating risk, for the sake of your business, is to purchase adequate business insurance for those risks you can’t plan for, minimize, or avoid in the future.