Assessing Risk – Connect

By: Kim Teti

“Risky Business” may have made a good ‘80s movie, but when you’re an entrepreneur (and not Tom Cruise), there’s nothing funny about it. While risk is an unavoidable part of owning a business, we’ll focus on ways to minimize it – and your stress level.

Research Payment History Before You Do Business
Sales are great, but if you close a sale and a distributor doesn’t pay, you were better off not closing it in the first place. But how can you know whether or not a new distributor customer will pay? You need to use a credit tool like Connect, which assesses risk before sales by looking at distributors’ past buying habits. Other suppliers report on their business experiences with distributors, and you can use this information in turn to make smarter decisions.

​Measure Other Risks
You also need to measure risk aspects in other areas of your business. Here are places you should look and a few questions to get you started.

1. Internal Environment
   1. Financial. How are your expenses? What are your profit margins? What are your plans for growth? Are there inefficiencies you can eliminate to save money?
   2. Marketing. What is your marketing plan for the next year? Do you have consistency in your overall branding? How is your response rate? Is your messaging clear and concise?
   3. Staff. Are your employees happy? What is your turnover rate? What benefits could you put in place to make employees happier and generate more output?
2. External Environment
   1. New Markets. What’s the buzz in the industry? How can you target new markets? What markets do you think are untapped?
   2. Competitors. Who are your top five competitors? What do they offer that you don’t, and vice versa? How can you attract their customers to your business?
   3. Economy. What patterns are you noticing? What does the future look like? Will you benefit from future tax breaks or be hurt by increases?
   4. Natural Disasters. Do you live in an area with frequent hurricanes or blizzards? What can you put in place to protect your business in a situation where you need to shut down for a period of time?

Prepare for Uncertainty
You can never prepare for everything, but you can develop practices to help you look to the future, create plans and act quickly when necessary. A future-focused attitude is crucial to the survival of small businesses, and you’ll save time, money and worry. Plus, you’ll get a BIG leg up on your competitors.
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Check out Connect™ and learn how it can help you assess financial risk. Visit the Connect page to learn more.