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Small Business Risks in 2014

Some of the biggest risks in managing your small business are, at least partly, hidden from easy view and, therefore, often overlooked. Start the New Year with a thoughtful review of how to prepare for something going badly awry in your organization. Let’s begin with a global overview.

Business insurance giant Allianz just published their annual Business Risk Barometer for 2014, rank-ordering the likelihood of 26 different business-affecting issues which could negatively impact organizations in the U.S. The accompanying photo lists separately the top 10 risks globally. The original pdf (from which this graph was copied) can be downloaded directly at or from my LinkedIn profile:

The opportunity for CEOs/General Managers is to make a realistic assessment of the impact of each of the 26 risks NOW and think through how you would deal with each if it arises. Two factors will determine how successful you are if any of these glitches pop up:

  1. If you plan ahead (with a Plan “A” and a Plan “B”), you’ll have the advantage of calm thinking and preparation instead of panicky “putting-out-fires” decisions, many of which may be short-term in their focus; and
  2. If you commit to writing your contingency plans, you’ll have a ready and uniform way to communicate to your colleagues/subordinates what direction(s) you’re taking to deal with a situation. An informed team, armed with shared information, can be just the powerhouse you need in crisis.

On Jan 15, 2014, Fox Business News analyst Donna Fuscaldo published a meaningful alert under the headline “5 Risks to your Business not in plain Sight” ( She builds a good case for preparation for these risks:

  1. Loss of Critical Employees: retention should be a high priority for managers who recognize that your labor force is your biggest asset, along with planning well in advance for retirements.
  2. Fraudulent Supplier Charges (as well as competitor/employee theft): monitor your data and invoices, and have a reaction plan if fraud is found.
  3. Employee Absence due to Weather, etc: remote work/telecommuting, with attendant security, should be available if your employees can’t come to you due to a storm or your office isn’t habitable.
  4. Shutdown of Suppliers: learn your vendors’ contingency plans in case they’re involuntarily shut down.
  5. Too Much Business in a Short Time: this is a problem you may dream for, but without an organized way to respond to an influx of business, overloading the boat could turn into sinking the ship.

A comment on Number 5: your competitor need not be your enemy. I’ve seen some great examples of teamwork between competitors when one faces a problem. I recall a packaging company in L.A. which produced labeled, retail boxes on 6-color Heidelberg presses. A direct competitor a few miles away did the same thing, but with different model presses. The two companies each trained their production people on both sets of presses and, in a pinch, were usually able to fit orders in on the other’s equipment during third shift and/or weekends, always under the supervision of an employee of the host facility. It cost them some overtime and supervisory time, but by picking-and-choosing which orders to work elsewhere, they were each able to retain accounts over time.

Mark Walker writing on on Jan 6, 2014, titled his article “The Silent Killers: Three IT Dangers That Could Ruin your Business. His premise was that IT can make or break your business, and he identified three “company killers:”

  1. Onsite: keeping intellectual property on your own server is an invitation to theft or loss. A 2013 Symantec survey of small-and-medium size businesses revealed 44% would lose at least 40% of their data in a disaster impacting their server.
  2. Outage: your server, your network, individual PCs, or specific programs used by your staff may fail, leaving you unable to access vital information. The same Symantec survey found the median cost to a small business of downtime from an outage is $13,000, while a Federal Government study concluded that 25% of small businesses will not survive a major IT disaster.
  3. Outdated Software: old software is generally slower, more limited in functionality, more costly to maintain, and offers less intellectual property protection than current versions. IDC Research found that an organization employing 1,000 knowledge workers loses an average of $5.3-mil annually if users can’t retrieve the information they need. How would that translate to your 100 or 10 workers?

So, what to do with this information? You can read it, say it’s interesting, and move on to something else. Or, you can use it. It may well be that not each of these items applies to your situation, but how do you know for sure? I suggest this is the perfect opportunity to utilize an interdepartmental committee, even in a small organization. Different priorities and viewpoints can spark dialogue which is the most profitable means of problem prevention and resolution. And a group lunch or dinner will be appreciated by the people who put forth the effort to look at all aspects of your organization, prioritize the issues, and make recommendations to both prevent and fix each one. But, the most important thing you can do is to not just move on after reading this. Create some kind of action plan, involve some of your people, and then make timely decisions on what you are going to do and implement them. Leave the catastrophe out there on the horizon for the guy down the street. Work smarter while he works harder.

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