As a trades business owner, it is important to understand all aspects of your business so you are able to run your business effectively. One area that requires attention and planning is understanding and managing the risks in your business, spending the time to document risk will help you to save stress, money and time when something does happen.
Being a tradesperson there are several types of risks that you may need to mitigate at some point in time.
Creating a document that highlights each risk and how it would affect your business will help you to understand the importance of each item and how it can be mitigated.
To explain further here are two examples of a risk that could happen in your business and how it could be minimised.
Equipment malfunction or breakdown
If you are a plumber and you rely on an excavator to help dig trenches etc for your projects, what happens if that piece of machinery breaks down? Some of the implications would be- project is stalled, timeframe blown out, future projects implicated, cashflow implicated, and then you need to find the money to get the machinery fixed or replaced, which is a financial outlay that you weren’t planning on. This issue may not be avoided, but it could be planned to ensure you have a backup in place that would only cause minimal disruption to your business.
An example of how you could mitigate the above scenario is by ensuring you have enough cash flow to fix the machinery or purchase new machinery, or you could hire or lease the machinery so that you just need to take it back to the dealer to fix and swap it over.
Employee liability is one area that can be completely unpredictable. Human error which can cost you financially, or a workplace accident that can cost you an employee being injured and unable to work, in turn costing you time and money. In this scenario ensuring you have the right staff in the right positions of responsibility and within their capabilities or ensuring staff are being properly supervised can help to minimise these disruptions. Also ensuring you have the correct insurances in place in these scenarios that you can rely on when you find yourself in this position.
Another scenario that involves employees is the time spent to train up new staff members to have them leave and or take clients with them as they move on. This is an issue that happens regularly and it can be tricky to mitigate. One option is in your employee contracts, what clauses do you have to help minimise this disruption, it could also be a probation period with certain clauses in it- dependent on what type of business you have.
As you can see by the above scenarios, creating a risk management plan will help to keep your business protected and you can save time by
activating your plan if any of the above scenarios occur to you.
You can’t always prevent things going wrong in business but you can control the way you react to a scenario.