The biggest problem with owning a small business is that your life can be full of worry. I encourage my coaching clients to manage their potential risks. If you do the same, this will allow you:
- To identify which issues must be resolved to keep your business running smoothly and
- To ignore or forget your other worries.
Identify your potential problems
1. What are the critical factors in your business? Staff, supply chains, quality control, product delivery, cash flow … Type them into column 1 of a spreadsheet.
2. What specific business problems follow a failure of each factor? Add them into column 1 under their related critical factor eg. poor cash flow can immediately lead onto an increase in your overdraft.
3. What is the risk of the factor failing in the next year? Is that risk the same for each ensuing problem or is the risk spread between them? Type these risks against each critical factor or specific business problem into column 2.
4. What would each major problem cost you in lost revenue? This goes in column 3.
5. Which problems have a high cost and high risk? In column 4, give them priority 1. Which have a high cost/ medium risk or medium cost/ high risk? They are priority 2.
Decide what to do
6. What events lead to each significant problem? You need to monitor these events on a daily or monthly schedule so put a recurring reminder in your electronic diary.
7. How do you plan to respond when one of these events happens? Write in your business continuity plan your chosen response: to plan to accept, to avoid, to contain, to remediate or to transfer the costs of the event.
Put succinctly, if you want to stay in business, you have to pay the cost of managing your priority problems; if you don’t manage the right problems, you will be out of business.
So use this spreadsheet technique to focus on what you need to worry about - then you can spend the rest of your effort on building and growing your small business.
Adrian Pepper coaches people through business and personal difficulties, helping companies figure out what to do, how to move forward and what to get organised. You can contact him through Help4You Ltd , through his website at http://www.help4you.ltd.uk or by phone +44-7773-380133. At http://feeds.feedburner.com/help4you , you can listen to his podcast for small businesses.