Risk management isn’t something reserved just for large enterprises. In fact, it’s an important part of any small business strategy, although it’s rarely at the top of the list when it comes to priorities for small business owner. The first step is to understand the benefits of risk management, and the potential risks your business could face.
Adopt a risk management culture and mindset
I've been around small and midsize businesses my whole life. My grandfather owned a small liquor store. My mother owns a grocery store. My sister owns a hairdressing salon. Each of those family members worked hard to create a successful thriving business – despite the risks they faced, including competition, recessions and supplier issues.
In that way, the small business owners in my family think about risk management all the time—but they don’t call it risk management. Instead, they worry. Like all small business owners, their list of concerns is growing all the time: safety hazards, the stock market, cash flow, seasonal dips in spending, and the list goes on.
But today’s small businesses should strive to be more efficient than simply worrying.
Risk assessments
So, how should you start assessing the risks that impact your small business? One way to begin this process is to write down all of the risks you’re concerned about along with the possible outcomes. So, one risk is that your favorite supplier goes out of business. The consequence would be a pricier supplier in another region. From there, you can decide which items are most important and assign resources to address each issue accordingly. In the example we are using, you would be aware of prices listed by competitors to your suppliers, and be prepared to switch suppliers if you had to.
This mindset applies to your IT environment also – even if it’s just your laptop. The risk your computers and data are facing exists in the simplest forms – coffee spilled onto your keyboard, or computer theft, for example. This is the main reason small business owners invest in computer backup, to eliminate the worry that they could lose all their important data.
Here are some great resources that can help you get started on a risk assessment today:
Disaster recovery
Another way to think about risk management is in the context of disaster recovery (DR). Small businesses should consider all the steps they would take if there business were to suffer an on-site disaster. One way to get started on mapping your DR plan is to download Carbonite's free Disaster Recovery 101 Guide. This guide will walk you through the basic terms and concepts in disaster recovery and give you step-by-step instructions for building out your disaster recovery strategy. You’ll learn how to update, test, and make sure your disaster recovery plan evolves with your business.
