10 MAJOR RISK AREAS SEEN IN BUSINESSES TODAY
Business owners face a litany of business risks every day. Here are 10 major risk areas (in
no particular order) that our clients have faced over the years. Do any of these sound familiar? If so, reach out to your financial advisor today to plan your risk mitigation strategy.
CUSTOMER
CONCENTRATION.
MISUNDERSTANDING
COMPETITORS or
MARKET DYNAMICS.
How well do you know your
competitors and the market
dynamics of your industry?
Take control of your business’s success by taking
time to understand all aspects of your business and
the industry landscape.
NON-COMPLIANCE
with GOVERNMENT
AGENCIES (i.e. IRS,
Department of Labor).
How well do you know the
regulations you are responsible for as an employer?
Failure to comply with
regulations could result in
steep fines and other consequences. Know what the
law expects from you.
SUPPLIER
DEPENDENCE.
Are you too dependent
on only a few suppliers?
Diversify your pool of
suppliers to ensure that
you will always have
what you need, when
you need it.
DIFFICULTY IN
FINDING and
RETAINING GOOD
EMPLOYEES.
Employee turnover can
disrupt your business’s
operations and affect
productivity. Develop a
recruiting strategy that
will set you and your
business up for success.
If your business relies on one or two customers, consider
the devastation your business could endure if something
were to happen to them. Perhaps it’s time to bulk up your
customer base.
NO BUY-SELL
AGREEMENT.
LACK of
CASH FLOW and
POOR FINANCIAL
REPORTING
SYSTEMS.
If you’re just guessing
at how well (or not well)
your company is doing,
you probably don’t
have a proper financial
reporting systems in
place. Zero in on your
cash flow.
INADEQUATE BUSINESS INSURANCE
or ‘KEY MAN’ INSURANCE.
Don’t leave the future of
your business up to chance,
a buy-sell agreement could
help secure the future of
your business.
NO EMPLOYMENT
CONTRACTS or
NON-COMPETE
AGREEMENTS for
KEY PERSONNEL.
If you don’t have an employment contract or noncompete agreement on file
for your key employees, you
could be watching valuable
clients – and revenue – walk
out the door. Use contracts
to protect your revenue
stream.
Make sure you have the right insurance in place
to keep your business afloat in spite of a tragic,
unforeseen event.
POOR INTERNAL CONTROLS.
Does one person manage your business’s finances? Consider the risk you’ve created by
putting one person completely in charge of thousands, perhaps millions, of dollars. Share
the responsibility and strengthen your internal control structure. This is just one of many
internal controls that you need to evaluate and consider implementing if you haven’t already.
To learn more about these business risks, visit www.knowa