Business is contingent on supply and demand. Business to business interactions are the same, maybe more crucial considering scarcity of time and resources. To compete with larger businesses, small entities need to take fewer risks and make better ongoing decisions.
Regardless of individual business model, from a macro perspective, particular elements warrant risk assessment and management.
Customers seek a number of traits from vendors. In B2B settings, one business’ level of service directly influences that of another. Consistent, dependable, and efficient customer service is necessary. In business-to-consumer settings, customers act upon a level of expectation; the product or service needs to deliver on the promised value as advertised.
Create a general framework, tracking current processes, evaluating, and producing suggestion for further improvement. Scoring base levels of service versus superior service ensures top-level performance, helping a business distinguish itself from competitors.
It takes money to make money, a popular finance mantra that helps financiers add by subtracting. Analyze current costs, seeking alternatives. Keeping a close eye on costs ensures the business has the funds when most needed. Businesses don’t go bankrupt on purpose; it’s best to have dollars stashed away for worst-case scenarios.
A number of businesses lose money due to inattention, a potential ‘hole’ or risk present in operation. Consider hiring a full-time accountant, or assign an in-house employee to managing day-to-day and monthly costs. Mismanaging cost, amid a slow season or decrease in commerce, could have a permanent influence on business. Don’t make risk management an added money hurdle.
Managing costs often has to do with protecting your assets. There are businesses that specialize in housing your machinery and IT equipment in structural frames and enclosures (see more from HTE Technologies for example). Although these custom solutions may have higher upfront costs, they increase the durability of your company assets over time, thereby reducing running costs.
Professional sport teams pay scouts good pay for recruiting young talent. The process is responsible for future winning seasons and championships. Successful businesses need great employees ,yet it costs to evaluate and train personnel. A level of risk is assigned to each new hire.
Furthermore, a company must continuously evaluate their investment in the employee, ensuring output, level of comfort, and ongoing training is mutually satisfying for employer and employee. Great human-resource departments and initial assessment framework saves companies money in having to fire old employees, and then hire and train new ones.
All businesses have high aspirations and expectations to become great. Sometimes, in order to expand or get to a better level of opportunity, businesses form partnerships.
Aside from direct partnerships, businesses outsource needs to other entities, creating a need for supplier risk management, whether acting as the supplier, receiver, or both; supplying places emphasis on customer service, and receiving warrants close management of costs.
There’s great attraction for small business owners to seek partnerships in initial years of enterprise, when risk is great and ability to expand at will is small. Ensure you pay due diligence regarding angel investors, partnership opportunities, and public offerings.
Additionally, credit cards can be considered ‘partners’ too, allowing small business owners to ‘lean’ on the immediate gratification at the cost of high interest rates.
Every business is unique, but initial and ongoing needs of core business models remain. Take less risks with your business by tracking customer service, monitoring daily and monthly costs, investing in human resources management, and approaching partnership opportunities with due diligence.