Assess threats to your business
As every news bulletin reminds us, no business is safe
for long. Even putting the financial crisis to one
side, the safest business can be shaken by
the emergence of a powerful competitor, shift in customer
demand or something else behind their control such as a
supplier going broke. By carrying out regular assessments of
potential threats to your business, you'll at least minimise the
risk of that happening. This guide covers:
- Carrying out a risk assessment
- Common threats to watch for
- How to protect your business
- SWOT analysis
Carrying out a risk assessment
Set about a thorough risk assessment of your business processes.
Identify all threats and how they could impact on
your business, how likely they are, when they may happen and
how long the damage would last. Then work out the seriousness of
each threat - what loss you would incur from them, measured either
in terms of finance, damaged reputation, lowered staff morale, loss
of credibility, or other possible negative outcomes.
- Identify all threats
- Evaluate impact in worst case
Common threats to watch for
Look at both external and internal factors. Threats from
outside include new competitors, a downturn in the market, shifts
in customer demand, rises in interest rates or the cost of raw
materials. Internally, look at IT security, brand integrity,
staffing, strength of your management team, spread of your
customer base, suppliers. Consider fire, flood, theft
and vandalism risks.
- Consider both internal and external factors
- Pose yourself strategic questions
How to protect your business
Once you've identified the threats, do what you can to dilute
the risk. For instance, if there is too much dependency on one or
two customers, an obvious step is widening the client base. Avoid
market changes by not investing too far into the future or focusing
on one product. Then look to protect yourself in case it happens
anyway. Create a contingency plan for each risk and look at taking
out insurance against the key threats.
- Try to dilute risk
- Put contingency plans in place
- Insure against real threats
SWOT analysis
SWOT (strengths, weaknesses, opportunities and threats)
analysis will help you pull all of this together into a clear,
actionable process. Look at the company from a top level, assessing
big risks then hone in on specifics to ensure you're covering all
threats from outside and inside. Carry out the process every six
months and keep a live SWOT document you communicate to all senior
management.
- Carry out SWOT analysis
- Focus on top level and detail
- Update, keep live and communicate
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