One of anything!
The numbers in a business are the instrument panel by which an owner should run his business. It still amazes me how many business owners I talk to have no idea and no interest in their numbers – until it is too late! That’s why there are many businesses out there with too many ONE’s in the business. Let’s look at just some of the areas of a business where ONE is a risk. If you have any of these ONE’s in your business, ask yourself “How can I reduce my risk?”
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- ONE major client. Even with contracts in place there are many ways you can lose the client and if you do then your business is likely to fail. Any client / customer that is greater than 15% of your revenue is a risk and reduces the value of your business.
- ONE supplier. Again, even with contracts in place risk is real. The supplier could go out of business or cancel the contract. A supplier can find another outlet for their product or come in to your market and go direct. It happens!
- ONE key ‘expert’. What happens if the ‘expert’ leaves the business, suffers ill-health or is poached by a competitor?
- ONE key employee. Some businesses rely on one key person (or owner) to do everything. All the knowledge is “in their head” and that is a major risk. This is the case with “practices” that are based upon an expert. Remember, a good business is based upon systems, not an expert.
- ONE product or service can become a problem. If that product or service goes out of date, is made redundant by a superior product or gets copied (e.g. video hire, photographic processing etc.) or people buy cheaper over the internet or from overseas suppliers, then you are in trouble. You need to innovate all the time to stay ahead of the competition.
- ONE computer system / database with all the business records on, can be very high risk. Yes, I’m sure you do backups – but when was the last time you tested your ‘disaster recovery process? How long before you would be back up and running?
In this age of rapid change, disruption and increased competition, if you are not innovating and evolving faster than the market you are in, you could go out of business. Aim to make your product or service redundant before the competition do. (An old Sony maxim, I’m told). Look out for trends.
Finally, is your business model going out of date and you haven’t realised it yet? For help with all of these things, attend my next workshop on HOW TO TURN YOUR BUSINESS IN TO A VALUABLE AND SALEABLE ASSET – CLICK HERE FOR DETAILS
I could go on but I’m sure you have got the message.
I’ve used the word ‘risk’ a lot and that’s because it IS risky having ONE’s in your business.
So what do you do about it? Well the starting point is to conduct periodic “risk analysis” assessments. It doesn’t need to be onerous and is best done on a continuous basis. At your regular management or team meetings, take different parts of the business each month (or period) and brainstorm the risks with your team. It often improves the process if you have an external business consultant or coach involved in these sessions because they are not too close to the business, or emotionally attached to it, they will ask better, probing questions.
When you have identified the risks, categorise them by using the LIKELIHOOD / IMPACT process. Assess how likely things are to occur and then assess the possible impact on the business. For most businesses it is sufficient to score IMPACT and LIKLEIHOOD as HIGH, MEDIUM or LOW. Then prioritise the risks starting with the ones which scored HIGH on both LIKLIEHOOD and IMPACT. Now brainstorm ways to mitigate the risk.
As they say – forewarned is forearmed!
As well as assessing the ONE risks, think of trends and external risks, such as the falling Australian Dollar, rising unemployment, the downturn in the mining, resources and manufacturing sectors and things like government legislation.
If you need any help with risk analysis or anything else in your business, just get in contact with us through the CONTACT US tab or attend my next workshop on HOW TO TURN YOUR BUSINESS IN TO A VALUABLE AND SALEABLE ASSET – CLICK HERE FOR DETAILS