As a new business year begins maybe it’s the right time to perform a 2024 Risk Assessment of your business? Normally after five or six mentoring sessions, I casually ask clients to perform a ‘Risk Assessment’ of their business model. At this point I always warn customers in advance that this can be both an uncomfortable and challenging business mentoring session.
But in the long-run reveals invaluable insights and solutions on how to establish greater certainty for their business.
Currently many businesses are being impacted directly or indirectly with geopolitical, economic & social challenges. Some of the questions I ask relate to:
• Interest Rates: Commercial Mortgages, Credit & Banking etc.
• Supply chain issues: JIT, International Shipping, lead times with international manufacturing & production.
• Pro’s, Con’s, Opportunities: Currency Exchange Rates
• Fluctuating Costs: Energy, Fuel, Food & other Commodities.
• HR legislation: i.e. N.I & demand for higher wages
• New Tax Rates: inconsistent Government decisions on Taxation, Rate of Tax etc.
• Change in Social Behaviour: Home food delivery vs Eating out, Stay vacations vs Long-haul, Online buying vs High Street Retail etc.
Some issues may not seem to affect you immediately but will eventually trickle down with consequences on your business directly or indirectly.
‘I always remind clients that with every problem or risk there is always a counter solution or opportunity.’
Uncertainty to Certainty & Threat to Opportunity
When presenting this session my aim is to help business owner’s move from a position of ‘Uncertainty to Certainty & Threat to Opportunity.’
This can be achieved by building a strategy of reducing your business liabilities & improving your assets. Revealing areas in your business where you may be exposed financially or operationally, encouraging you to make improvements where your are more protected & secure. To studying new innovations and technology that would advance productivity or eliminate weaknesses in their business model. In some cases re-engineering there business model with the use of traditional design skills and thinking.
Why not do a simple S.W.O.T ANALYSIS on the six key functions of your business and consider where you may be potentially exposed to risk? And implement actions to provide added protection to your business model.
2. Sales (+ Marketing)
4. Human Resources
6. Products/ Services
Here are just a few questions that I ask business owner’s. Over the years this has triggered some unusual responses, resulting in some impactful conversations and strategical decision making.
- Do you have a single customer that accounts for more than 40% of your turnover? What would happen if they no longer existed?
- What is your customer ratio, does this present any risks: Private vs Public Sector? Domestic vs International? Sole trader vs Corporation?
- Do you have any single supplier that if they ceased to exist would have an instant impact on your business operations, manufacturing, service delivery?
- Do you have any employees- that without them your business would implode into chaos or would be dramatically impacted in some way?
- What is your greatest threat with relationship to: Automation, A.I., Cyber Security, Software dependency?
- What would be the tipping point if there was an increase in: Energy costs, Fuel Costs, Raw materials, Currency exchange rate, Interest rates, Commercial Rent, Commodity prices?
- Is there any new legislation that may impact negatively on your business model? Health & safety standards, minimum wage, N.I costs, Laws i.e.Airbnb in Scotland etc. Anything coming in 2024?
If any of the above questions trigger a reaction, please feel free to read on with some of my solutions in the following two articles
And discover how to turn ‘Uncertainty to Certainty & Threat to Opportunity.’ Or alternatively visit us at dfmckeever.newzenler.com.