Did you know that around 50% of new businesses in the United States fail in the first five years? That represents a pretty large percentage of the small business sector. They could be failing for any number of reasons, including poor leadership, not enough funding, a struggle to market, cost of production, or even poor planning.
Many of those circumstances are beyond the control of the business owner, though plenty of them are not. Various threats can pose a big risk to the future of a business, and many of these threats are often unexpected.
If you are a business owner, then risk assessment is part of your job. You have to evaluate the various threats that could put the future of the company in jeopardy and then take steps to mitigate them. Here are some threats that you may not have considered but nonetheless require some practices to defend against.
Unhappy Workers
We are a product of our environment. This is true whether we are at home, at school, exploring downtown, or at work. Your employees are a product of the workplace environment. If you have a toxic culture or a space where innovation is discouraged, then workers will be unhappy. This could cause high turnover rates that halt progress and can waste your company’s resources.
Valuing your team members and investing in the culture is necessary if you want happier workers who will be more productive. There are many ways to boost employee morale, so lower the risk of high turnover by investing in your team.
Theft/Natural Disasters
Some threats are entirely external and completely beyond your control. You can do very little to stop a flood from damaging your company premises or change the mind of a person who is bent on stealing products from your store. The key is to mitigate the effects that these incidents can have on the company.
Ideally, you will have invested in a strong business insurance policy that can protect your resources when these scenarios happen. That way, the financial losses that would occur are prevented since the coverage can absorb most, if not all, of those costs.
Cyber Attacks
Your company may be heavily reliant on Internet services to function. Whether that is because of using cloud technology, online point-of-sale systems, or accounting software to track your finances, there is a lot of data that exists in cyberspace.
This information is vulnerable to cyber attacks from phishing, malware, viruses, and even insider threats. Investing in stronger cybersecurity measures with help from firms like GSI can protect your online information as well as customer data, both of which are critical to safeguard if you want to be a successful brand.
Supply Shortages
If you sell some sort of physical product, then you have a supply chain. The resources you need to produce the product are crucial for meeting consumer demand, and if that chain gets interrupted because of a shortage, it can make meeting those demands more challenging. Mitigating the damage from a supply shortage may be unpredictable.
One strategy is to diversify your suppliers. If you obtain raw materials from multiple suppliers, it can be a little easier to make switches if one of them is running low on a specific material. Simplifying the products you offer can also help so that you are less likely to lose entire product lines because one resource is short. You can also invest heavily in your risk assessment initiatives so that shortages can be discovered sooner.
Seasonal Shopping
Consumers behave in seasonal patterns. At certain times of the year, they will buy different products in a very cyclical manner. For example, companies that make summer clothing may see fewer sales in the fall and winter as people are more concerned with bundling up. Seasonal shopping can affect far more businesses than you might expect, and your company could be affected by these downswings in demand.
Offering more diverse product lines can help you cover some of those gaps, but you can also try to offer services that are needed regardless of the season. Though this concept may not be considered a “threat,” it is certainly something that requires planning to address.
Handling Threats Requires Planning
Relying on improvisation can be the path to bankruptcy for a business. Part of the reason why so many businesses fail is they are ill-prepared to deal with threats. A proper risk assessment process, as well as intense planning for potential threats, can mitigate the negative effects that may occur from these scenarios, ensuring that your business can survive.
