29th Oct 09
TomMy friend Jill and I were talking about the business risk management book I’m working on. Jill consults with small businesses and was saying how many small business owners are hesitant or even resistant to planning. Many just don’t feel that they have the time or are intimidated by the process and the required effort. “Why should they care about risk management, Tom?”, Jill asked. It’s a very good question.
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In my mind, there are 5 reasons a business owner should want to learn about and practice business risk management. By implementing business risk management, you can:
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- Avoid bad things that are likely to happen to you.
- Minimize the consequences of bad things that you can’t avoid.
- Identify and take advantage of opportunities you may not see.
- Do more than just insure against a few risks, with little or no added expense.
- Join the best-run businesses.
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Let’s briefly talk about each reason…
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Avoid bad things that may happen to you
Practicing risk management will help you identify risks that can have disastrous impacts on your business, evaluate them and make plans on how to avoid them.
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Minimize the consequences of bad things that you can’t avoid
Even the best practitioners of business risk management can’t avoid all risks. Fortunately, the risk management technique I teach allows you to make plans on how to minimize the impact of those unavoidable risks, before they occur.
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Identify and take advantage of opportunities you may not see
As you go through the risk management process, you will also identify opportunities to improve your business. The technique helps you prioritize your opportunities and pick the lowest hanging fruit first.
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Do more than just insure against a few risks, with little or no added expense
You already buy liability insurance, property insurance, etc. to manage just a few of the risks facing your business, and those risks are some of the least likely to occur to boot. Why not follow through with your decision and manage the most likely and most potentially damaging risks if there is little or no expense involved?
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Join the best-run businesses
The best run businesses don’t leave anything to chance. They use all the information that is available to them to identify threats, find opportunities and make plans for both. And, the best run businesses don’t do anything that doesn’t yield a return on their investment of time. Risk management fits the bill on all counts.
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Imagine the comfortable feeling of knowing that you have plans for dealing with your biggest risks. Visualize the excitement of finding opportunities you hadn’t thought of yet. Think of the great satisfaction that comes from knowing that you are doing what only the best-run companies do. It is possible. I want to help. Let’s start today.
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What can I do to help?
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Dan Paulson
November 2nd, 2009 at 10:26
Hi Tom,
Great points here. I think many avoid risk management out of fear. People fear what could happen and allow that to paralyze them. The result often can be that no action is taken and the outcomes that person/company is trying to avoid actually become reality. Businessses should understand the costs of not taking action. They are much higher than making the investment and changing your operation to protect yourself.
Thanks,
Dan Paulson
CEO
InVision Business Development
Nicholas Hawtin
March 7th, 2010 at 11:40
Small business and especially start ups often claim they don’t have the time for risk management.
A simple question that often gets their attention is, “what would it take to put you out of business?”
A quick run through things like, “what if we lost our biggst customer”, “what if someone headhunted our sales manager”, etcetera, helps put things in perspective – and get their attention.
Thanks for the post.
Tom
March 8th, 2010 at 09:40
A great tip, Nicholas! I’ll probably ‘borrow’ the question sometime in a presentation or training class.
I appreciate the contribution to the discussion!