As we know, Australia’s small-business owners are reeling from the impact of not one but two crisis events in just a few short months. First, it was the 2019-2020 horrific bushfires, which for many now seem like a distant memory as they tackle the latest threat to their livelihoods, COVID-19.
Natural disasters have always been a part of not only business but life in general for Australians, however, the frequency and severity of these extreme weather events is increasing as climate change takes effect. Nobody realistically could have foreseen the COVID-19 pandemic, but the possibility of a global pandemic has been a reality for some years.
Of course, this current crisis requires many businesses to press the “pause” buttons on their regular day-to-day operations at the moment. As a business owner who has seen through two major national disasters in my business, my advice is simple – use this time to get prepared for next time.
All of us, as small-business owners, need to take the time now to think about the risks that face our businesses and make plans surrounding what to do if the worst happens. Luckily, risk management does not have to be a huge, complex process!
A small amount of time spent now can save a world of pain later – the process is simply about thinking through the things that could go wrong in your business, deciding what you could do to decrease the risk of that happening, and what actions you will take if things go wrong.
I speak from personal experience – our environmental business was affected by floods twice in three years. The first time, floodwaters didn’t reach the floor level, but the second flood poured into our office. A well-thought-out flood plan that was put in place after flood #1, however, meant that everything had been shifted to higher ground for flood #2. There was a significant amount of business disruption, but thankfully very little damage.
Having our thorough flood plan ready meant that our entire team knew what to do and when – it was as simple as when the water level rose to a certain level, at a certain local station, we were going to act.
Natural disasters aren’t the only risks to a business, however, and we have seen that clearly with the sudden arrival of a pandemic. Of course, there are also more mundane risks to business operations which can unfortunately have equally devastating effects on businesses.
The most typical areas of risk facing small businesses are:
- Natural disasters. Fire, flood, cyclones and severe storms
- Staff. A key employee leaving, high staff turnover, or fraudulent behaviour
- Information Technology. Computer hacking or loss of data
- Market Risk. Economic cycles, competition, or changes in consumer tastes
- Customers. Having a single, or few, large customers
- Suppliers. Dependence upon a single or limited suppliers
By no means is this an exhaustive list, but it is a good place for us as small-business owners to begin thinking about the specific risks that our businesses face – especially now, while many of us have the time to do so in a considered way whilst businesses are temporarily closed.
There are several simple tools that all of us as small business owners can use to identify and manage risk. A brainstorming session with your team and a simple Risk Matrix can be the difference between surviving a left-field event, and the business going under.
Bronwyn Reid, Owner, Small Company Big Business
This post first appeared on https://insidesmallbusiness.com.au on June 04, 2020.