Key Risks Which Small Businesses Must Avoid
This year has been a real humbling one for so many businesses and one of the key learnings which those who have survived have to make, is that of risk. It’s tough of course but those businesses which didn’t make it through the pandemic are those who were already overstretched with regards to risk, and the levee unfortunately broke. This is a topic which business analyst West Seegmiller has spoke about a great deal recently and businesses which have survived would do very will to pick up on the lessons which 2020 has shown us with regards to levels of risk.
These are the key risks which all businesses, especially small ones should look to avoid.
There is nothing wrong with taking on a bit of debt for your business but this must be from a reputable lender, with good terms and most importantly, for a very affordable amount for your business. If your company is paying any more than 20% of its income on debt then you should look to renegotiate or consolidate.
One of the biggest mistakes which so many businesses make is that they try to grow above their means. This results in premises which are too expensive, additional staff which aren’t needed and ultimately additional expense without the additional income. Businesses should always consult with financial managers and consultants before they decide to scale up, to ensure that it is viable.
There are two main risks associated with outsourcing, the first is a complete failure to recognize its value and the second is going over the top and outsourcing too much. With regards to the former, it is absolutely critical that businesses understand the need to outsource. At the very least your business should have outsourced its HR and accounting as well as marketing. The only thing to remember is that when you outsource, you have to ensure that you are getting a solid ROI. With regards to over outsourcing, your business, at most, should be outsourcing 3 or 4 operations, and they should all be making your business better and more profitable .
Hiring too many staff not only costs money which you don’t have to spend, but it also means that it is more difficult to offer exactly the same service to your customers across the board. Hiring extra staff should be done in reaction to a spike in activity.
Forgetting Loyal Customers
The need for new customers is always there and businesses will always have to ensure that they are pushing to grow the number of customers which they have. All of this is fine but you must never lose sight of the loyal customers which you have, they are the ones you really need to look after. It is more difficult than ever before to get loyal customers and this is why your business must do its bit to recognize them and to keep them satisfied.
Don’t fall into the trap that so many have before