While the word risk might be considered scary to most, when it comes to the entrepreneur or small business owner, they knew they were taking on when they started the business. Though there is an awareness of risk, it is essential as a small business owner to know and understand the types of risks you will take on as a business owner. Here are four of the most common risks that small business owners need to be aware of to be prepared to overcome them.
While every business could be considered a financial risk for its shareholders, it is the highest risk at startup and initial investment. It has no financial track record to show returns. Financial risks can range from the products or services the company offers risking a disconnect or failure with customers, to unforeseen disasters that can devastate a business in the beginning stages of operations. The financial risks a small or startup business faces are many, but the rewards can be significant even beyond profits if the risks are managed.
When owning a small business, you automatically take on risk to your reputation. These risks extend once you start the business to its reputation separated from you as the owner. Understanding that you and your business reputation can affect the success or failure of the company is essential. The management of the risks on your reputation is made more difficult in our digital world where feedback, both positive and negative, can be given within minutes of experience. Social media has made information and the sharing of it instant and, in some cases, viral. As a small business owner, this is another risk that has high satisfaction reward if you take it on and understand that you can minimize this risk by awareness and being proactive.
Anyone that is on the internet taking a security risk. This risk is particularly daunting for the small or startup business owner. A single cyber-attack could potentially destroy a company in a fell swoop. Understanding security risks for both the brick and mortar business and online business gives you an advantage when it comes to protecting against them. If you are unsure how to protect against cyber-attacks through software and protocols, it would be prudent to hire someone to safeguard your professional system. Some professionals deal with security at the brick and mortar business front as well. While security risks are common, they can also be minimized by taking proactive measures.
Risks in investments made by the business are the same as individual risks made in investments. If the business makes investments in stocks or other businesses, it is the business that takes the hit if there is a failure or downturn. Before making investments in the business name, you as the business owner must understand the risks versus the rewards and make investment decisions based on the business’s tolerance to take a hit. Most of the business risks should be in the business itself rather than outside investments until it is profitable and productive.
A small or startup business owner needs to be prepared to deal with all types of business risks and challenges. While these risks may seem overwhelming or even too risky, if you are informed of the risks and understand them and how to manage them, they should not hinder you from having your dream of owning and operating your own business. Every business owner has to face risks in life and finances. Managing risks and using your understanding will guide you in making sound financial decisions that will help you succeed in business and life.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.