No guts no glory. It is not possible to achieve anything in life without taking risks and small business is no exception. In order to succeed one should understand the risks and know how to deal with them. Some of the risks which small business owners may face and ways to manage them are as follows:
Departure of Key Employee: Usually small businesses have limited man power. Departure of a key employee may hamper or suspend business operation. To minimize this risk, you should be fully involved in your business, Also, you should know the daily activities of each of your employees. In case if any one decides to leave then you can manage the work with the help of other employees till you find the suitable replacement.
Employee disputes: A small business can be run successfully only when its employees communicate and fully cooperate with each other. Disputes among employees cost heavily to the business. This can be avoided by hiring like minded employees. In case it does not work then you have to find the reason for the dispute and act accordingly to resolve it.
Market Size Shrinks: Many small businesses serve niche markets. The size of these markets sometimes shrink due to different reasons. This causes very difficult situation for the small business and sometime pushes it towards the closure. This risk can be managed by offering more than one products in different markets.
Arrival of competitor: As mentioned above many small businesses serve niche markets which are smaller in size. Therefore, sometimes competition makes the survival difficult. This risk can be minimized by maintaining good relationship with your customers and providing quality product / service to them. Also, as suggested earlier a business should not depend on a single product or limited market. It should offer more than one products / services in different markets
Loss of Key Supplier: It is not possible to run any business without the cooperation of reliable suppliers. Usually small businesses rely on few good suppliers. An unexpected departure of a key supplier can give a big loss to an organization. However, one can manage this risk by engaging at least two suppliers for most critical items. Also, this risk can be further minimized by maintaining some stock of those critical items so, in case of loss of the key supplier you will have sufficient time to find a new supplier.
Equipment breakdown: This can definitely badly effect a small business. To overcome this problem small business owners should make necessary arrangement to minimize the down time. This can be achieved by having necessary expertise within the organization to fix the out of order equipment and by maintaining the stock of necessary spare parts. Also, the management should be in touch with the equipment manufacturer / supplier as well as with a qualified technician
Receiving late payments from customers: Many small businesses have limited resources. When some of the customers take too much time in clearing their dues it creates a liquidity crunch for the small business. This creates many difficulties and sometimes even jeopardizes the existence of the organization. This problem can be managed by avoiding long term credit to customers and by having a number of customers. In case some do not pay on time but others will do and this way the business operation will continue functioning. Depending on a single product and on few customers may turn out deadly for any organization.
I hope you found the above helpful. please feel free to comment.