Over the last 2 years, we have seen a number of significant factors affecting the marketplace, such as Covid-19, Brexit, supply chain issues, fuel and HGV driver shortages. These factors all represent changes to the risks that businesses face and to which they must adapt. These will have affected people, not just your staff, but your customers, too.
It is imperative that all businesses take a good look at their business and identify the risks, then consider options to mitigate those risks.
A simple question but a huge one: What can go wrong?
Examine the different parts of the business:
Income – How vulnerable is the income stream? How far forward can you forecast with certainty what your cash inflow is going to be – in 1 month, 3 months?
If you have some recurring income then what level of turnover does it represent? Does it, e.g. cover your fixed costs?
When are significant contracts or customer renewals due?
Suppliers – How robust is your supply chain? What is the mix, both in volume and value? Is there any over-reliance on one supplier or country?
Are they maintaining their service standards or is there slippage in any area? – look for trends.
How have their costs moved?
What is their credit worthiness now? When did you last check and what would you do if they ceased trading?
What are the environmental/carbon zero demands being placed along the whole supply chain?
Customers – What is their credit rating? It is more than likely it will have changed in the last two years.
What do they think of your services? When did you last ask?
What is the customer spread, again in value and volume? Is there any over-reliance on one customer?
How strong is your relationship? Is the relationship with one member of staff or with the business? What would happen if that member of staff left, e.g. would their replacement bring in other suppliers instead of you?
Operations – How robust is the after-sales process? How are your own service standards meeting or exceeding customer expectations?
What is your quality control like?
Plant and machinery – how is the maintenance and when does it need to be replaced?
IT – This is an increasingly important part of any business, but the risks of things like Cyberfraud are significant, especially with staff working from home, sales reps with equipment on the road, etc.
When did you last check that your IT infrastructure was satisfactory?
Staff – How have your staff been affected during the pandemic? Have a 1:1 with each and find out. Where are they now? What is their mental wellbeing, resilience, energy, etc?
If they are returning from furlough, how have their competencies changed and have the working practices changed?
Look at the age profile of your staff, e.g. retirements, etc. Are you planning your recruitment?
Who are the key employees – not just management? If they left, how would it impact the business? If a staff member left, would your customers go with them?
Political – There are always going to be changes politically, economically and socially that are outside the business control, Brexit being the biggest and best example. These changes can be seismic to a business. It is important that business owners keep up to date on the global marketplace and, in particular, potential issues on the horizon for their industry.
Insurance – This is a big part of protecting business risk but is your insurance cover still adequate for the changed business risks?
Risk mitigation can be insurance but it can, also, be enhanced working practices, staff training, outsourcing, recruitment, etc.
It might be beneficial to consider asking a 3rd party into the business to do a business risk audit.
We have many specialists who can help identify and mitigate risk across your business. These reviews are critical.
The big question: Is your business model still fit for purpose?