Business is about taking calculated risks but there are tactics that will help reduce the damage one decision can make. This can be seen as hedging your bets which is important especially if you are financially liable if the business fails. Smart business people plan for the worst then hope for the best as they need to protect the company’s image, brand, and staff. Going out of business does not just ruin companies financially but it also hurts staff which is supposed to be a cohesive unit. As a founder or director of operations below are some tips to help protect your business from risk.
The harsh truth is that many founders tend to think their idea will help sell more services or products than any other before theirs. This can sometimes be true but the amount of people that order too much of a product they cannot sell can eat away at their profits immensely. Drop shipping is receiving the order from the customer then getting a wholesale price from the supplier that sends it directly to the customer. The drop shipping business can be a great way to test products to see which ones will sell on a consistent basis. This can eat into profits a bit but it mitigates the risk while still making the sale of a product profitable to both companies.
Extensive Hiring Process
The hiring process for many small companies is flawed for the most part as it seems people are putting too much emphasis on their gut feelings about a new hire. A few rounds of an interview can help dismantle any façade that a potential hire is putting up. Giving them certain jobs to complete before the next round of interviews will be able to test their ability to work under pressure. Those who are not willing or able to do this will weed themselves out while those who really want or need the job will remain.
Outsource HR Duties
Plenty of duties that HR handles can be outsourced in order to reduce the risk of the company. A HR system in a small company can be difficult to run as word gets around a small office quite quickly. Reporting to a completely third party HR person can help reduce the intimidation that many people feel about going to the HR person about a superior. A full-time HR person can be a waste of money without enough staff so consider having an outside company handle it.
Sign Long Term Deals Instead of Short Ones Then Upping The Price
Too many companies that are just starting out sign short deals instead of long term deals in order to up their prices later for a larger deal. Stability is the name of the game when you are just starting out and cash flow is important. A few long term clients even if they are not as profitable as others are what a new business needs. These contracts can be renegotiated a year or two down the line once you are more established. Many companies are willing to pay 10 or 20 percent more for a service if they know the processes and quality that will be delivered as a cheaper option does not guarantee good work.
As you can see there are going to be plenty of risks that you can reduce as a founder. Make all of your decisions on the cold hard numbers instead of on your ego or gut feeling. Keep improving daily and your entire business will be a success.