7 Ways to Mitigate Business Risks in 2016

Running a small business comes with a number or risks. There's no way to safeguard your company 100 percent, but there are steps you can take to minimize risks. The biggest mistake small business owners make is not properly assessing for potential problems that can arise down the road and how to counter them. The experts at Corporate Business Solutions can evaluate your company to determine the best processes and systems to employ for success. If you're an entrepreneur who's worried about falling under due to unforeseen issues, then you need to start planning ahead.

Before going into the ways to reduce the impact of risks, let's first identify the two types of risks.

Healthy vs. Unhealthy Risks

Obviously, there are certain risks that need to be taken because they can potentially lead to opportunities. Completely avoiding risks is the biggest mistake a small business owner can make. Risks with benefits are considered healthy. To the contrary, unhealthy risks are those that pose a considerable amount of threat to your organization. The best way to tell is to weigh the pros and cons.

With that noted, here are a few tips to help mitigate unhealthy risks.

Become Money Smart

The biggest risk in any small business is improper management of cash flow. It's important to calculate how much money you have and how long it will last if profits were to cease. You should also identify cash-flow crunches, which can be done by calculating the total accounts payable and how long they are outstanding due to a slowdown in accounts payable. A contingency plan is needed to help avoid these type of crunches. Set aside up at least three months of operating costs to use as a reserve.

Corporate Business Solutions is a consulting firm that can help boost your productivity and profitability by assessing your company and recommending the proper solutions.

Insure Against Certain Risks

Standard insurance policies aren't enough to protect your company from certain risks. These are important to identify, so that you can insure against them. For instance, construction firms should have coverage for potential theft of equipment, not just damage. You could also obtain coverage for slip and falls that occur on your property or computer viruses shutting down your infrastructure.

Upgrade Your Insurance

Nothing stays the same in business, which is why entrepreneurs need to remain flexible. If your business is transforming, so shall your insurance. Your needs change over time, such as when you acquire new properties and equipment or switch locations. You need to ensure your policy provides the coverage you need at all times. If not, it's time to update it.

Insure Key Employees

Every business has key employees. Without them, your business could potentially fail. Anyone that's this important to an organization should be insured against. Make sure to review your policy quarterly to ensure that it isn't outdated.

Diversify Your Clients

This isn't possible in every industry, but if you can, do so. Having a broader range of customers is better in case a particular industry witnesses a reduction in demand. Being dependent on one particular client is never good for business. If you have a customer base that makes up 60 percent of your revenue, then losing them would cause a major impact on your finances.

Reassess Your Business

When was the last time you evaluated your business plan? A lot of entrepreneurs fail to reexamine it after they've opened up shop. You should go over it again and update it accordingly. You can also have your company analyzed by professionals from Corporate Business Solutions. Reviews have been written about CBS, applauding their great consulting services.