A startup’s guide to business risk managementMunira Rangwala
When your startup is flourishing, your main focus is on driving greater sales and expanding your business. While it is important to focus on the positive aspects of your business, it is foolish to ignore potential future risks that might cripple your company in the blink of an eye. Some of these risks are location hazards like nearby fires and hurricanes, while other perils could include human risks like fraud and theft amongst your employees. It is necessary to secure your company against such risks in order to ensure future success. Here's how your startup can manage any curveball thrown its way.
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Take note of your financials
Knowing where your cash is coming from and how much you have stored away for a rainy day is important. You can either manage your book-keeping by yourself or hire someone trustworthy to do it for you. You also need to establish good relations with your suppliers and vendors so they give you the leeway to pay late in case you face a cash crunch. You also need to ask yourself some important questions like what you would do if your biggest client went away or your most popular product stopped selling overnight. While you can't anticipate all future risks, it is best to be prepared against the ones you can predict.
Secure your company against cyber crime
All companies, irrespective of their size, are falling prey to cybercrime. Hackers are now turning their focus to cloud based systems which are being used by more and more organisations. In order to secure your company against cybercrime, you need to educate your employees on how to create safe passwords, how to use the web safely, and how company data needs to be protected.
Take the legal route
For a startup, it can get expensive to hire legal aid especially in the first few years of its operations. However, no startup can succeed without legal advice. Hiring an accountant who will take care of your financial liabilities and protect your assets will prove to be a boon in the future. Similarly, getting an attorney to review your contracts and give you legal advice on day-to-day affairs is just as important. If you have close advisors who you can trust, they will point out any doubts they have regarding a certain contract, vendor or employee and you will benefit from investing in them in the long run.
Avoid long commitments
Signing on a long term lease for an expensive office address should be avoided in the initial years of your startup. Clients change and your scope of work might narrow or expand and you need to be flexible in the first few years so that you can make quick adjustments when required. Any commitment that might prove to be a drain on your finances should be avoided like the plague.
If you keep putting away risk management for another day, you are bound to get caught in the trap of your own making. While it is important to enjoy the growth and success of your company, it is equally necessary to predict potential risks and take measures to prevent them.