As a small business owner, you’re no stranger to risk. In fact, one could say that putting down an initial investment and starting the business itself was a risk. This notwithstanding, if there was a way to reduce your risk profile and increase the chances of your business surviving for several years, the smart move would be to consider it. So, in this article, we’ll look at the topic of risk reduction, how you can reduce your company’s exposure to certain factors, and the benefits of doing so.
How can you reduce your business risk?
There are several ways for any business to reduce its exposure to risk. Of course, what works for your company will depend on your processes and mode of operation, along with other internal factors. However, here are some examples of what risk reduction can look like in practice:
- A restaurant that offers food delivery services runs the risk of being liable for accidents involving its dispatch riders. The business could remove this risk by canceling the delivery service and telling customers to pick up their food in-store. However, online orders contribute over 65% to the restaurant’s total revenue so that move means it loses money. A better alternative would be to reduce the risk of accidents by only hiring experienced riders and putting them through comprehensive training programs.
- A professional service provider knows that working with clients from the medical industry carries a higher risk of lawsuits. Because of this, so many other firms are moving away from that sector. However, these exits have created an opening in the industry that smart companies can take advantage of. So, instead of avoiding the space completely, the firm may work with lawyers to create water-tight contracts, or add automated computer systems to their oThese factors matter when insurance providers estimate your monthly premiums, and the more risk-free your operation is, the less you’ll pay to get insuranperations and reduce the chances of human error.
As we mentioned earlier, reducing the risk that faces a business will depend on its specific mode of operation. Subsequently, you must look at your processes, pinpoint areas with higher risk level, and come up with ways to reduce your business’s exposure. Of course, you could also consider transferring the risk completely to an insurese factors matter when insurance providers estimate your monthly premance company, but even then, you’ll benefit from reducing risk.
What are the benefits of business risk reduction?
If you put in the work to reduce the risk profile of your small business, here are some benefits you stand to enjoy:
- Reduce your exposure to lawsuits
Less risk means less accidents, which in turn means fewer lawsuits. If your business process is optimized to protect your employees and customers, there will be less unfavorable incidents. This means fewer people would have reasons to sue your company or seek damages for any reason.
- Reduce business interruptions
Another advantage of reducing risk and accidents is that your business can keep running without interruptions. For instance, if a cleaning business suffers a toxic chemical spill, work has to stop until that issue is resolved. You can avoid that by making sure hazardous chemicals are only used in a controlled environment.
- Reduce your insurance costs
Perhaps the biggest advantage of reduced risk, less accidents, fewer lawsuits, and no business interruptions is the insurance benefits. These factors matter when insurance providers estimate your monthly premiums, and the more risk-free your operation is, the less you’ll pay to get insurance coverage.
In conclusion, all small businesses must look toward reducing their risk profile. It’s not only good for the health of your company, but it also benefits your employees, customers, and your end-of-year bottom line. Of course, you could choose to transfer the risk completely by working with an insurance company, but even that comes with certain conditions if you want to get a fair deal – and one of the conditions is that you reduce your business risk.
