People are obsessed by start-up failure statistics, but growing
a business carries some substantial risks. These are related to
areas such as cashflow, funding, people issues and competition.
This guide gives you an overview of specific risks you'll encounter
when growing your business and how to manage them.
- Types of risk
- Evaluating risks
- How to manage risks
Types of risk
Every business has a different risk profile, but there are
certain risks that all businesses could be exposed to. Financial
risk includes the way you finance your business, cashflow and the
credit terms you offer. Strategic risk include looking at the
industry you are in and assessing factors such as the competition.
Compliance risk relates to the introduction of new legislation that
could affect your employees and operational risks need to be
considered in the event of the theft or breakdown of any equipment,
- Risks can be financial, operational, compliance-related and
- New legislation can also pose additional risks to your
Evaluating risks will help you to determine their significance
to your business as well as enabling you do develop ways of
preventing or minimising their impact. There are several ways to do
this: assess your business plan and consider how likely the risk
will be and what effect it is likely to have. Rate the risks on a
scale of one to ten so you can see them in relation to each other
as well as identify those that are more significant than
- Rate risks on a scale of one to ten so you can easily see which
ones are more important than others
- Assess the risks against your business plan to identify those
in need of action
How to manage risks
Once you've identified the risks in your business, you can
choose to minimise them, eliminate them altogether by introducing
safety measures for example, or transfer them through insurance.
It's important to bear in mind that risk management is a long-term
process - monitoring and evaluating risks needs to be carried out
on a regular basis to ensure that the right procedures to deal with
risks have been put into place.
- You can minimise, eliminate or transfer any identified
- Risk management needs to be carried out on a regular basis in
order to remain effective
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