Protect your investment and ensure business longevity
- Sue Blatchford
- 27 June 2008
- Page 1 of 3 : single page
Small business owners spend most of their time working hard to establish, maintain and serve their clients and business. This doesn’t leave much time for pondering potential future challenges and establishing safeguards to protect their business against adversity.
Sydney Business Exchange
owner, Colin Bennie, has over 20 years experience as a business
broker, and has often been involved in selling the same business more than once. Colin’s years of experience have left him with enough stories of success and failure to rival the Lord of the Rings trilogy. Colin believes it’s how a business owner
handles and prepares for adversity that is ultimately the difference between success and failure. Adversity comes in many forms, from the most known to the least-considered, such as industry and technology changes, and personal health and
relationships.
It doesn’t matter if you’re a new start-up, taking over an existing concern, or a long-term business owner, there are many steps and actions you need to take that will protect your business. The following is a top-level roadmap to help you in planning for your business longevity and ongoing success and growth.
Small business insurance
Business insurance is a standard protection, however, many start-ups and home-based businesses neglect this. Obviously, it’s important to be covered for fire, property, burglary and glass, however, this type of insurance does not protect you for failure to plan your business.
A recent report by the Chartered Management Institute revealed only one in three small
businesses have a proper business contingency plan. Although most managers indicate business contingency is an important part of business, and auditors, insurers and even customers expect the business they deal with have them, it seems small
businesses struggle with funding specifically for contingency management.
Realistically, how does a small business owner calculate risk and endeavour to create a contingency plan? The answer is that you must dedicate time, perform some type of risk assessment and devise solutions and contingencies for each area identified.
A risk management process involves:
- identifying the risks related to your business activities
- assessing the likelihood and possibility of an event occurring
- identifying which events are the most serious and prioritise accordingly
- establishing how to respond to each risk identified
- developing systems and processes to manage and solve issues as they arise
- monitoring and maintaining your risk management for maximum effectiveness.
There is the well-known story of Nudie, the juice company who lost everything in a factory fire in 2004, but still managed to keep the business alive and flourishing despite the initial setback.
“I was watching as the fire engulfed the factory and I turned to my marketing director and said, ‘We’ve got to find a new factory tomorrow’. It just didn’t occur to me that we would not rebuild the business. Like starting a business, it was a big
project, you just have to start doing things, step by step by step,” said Tim Pethick, Chief Executive Officer, Nudie Juice, in an interview on reachout.com.au.
Business interruption is one area that is out of your control and a crucial area often overlooked by small business. However, bills, rent and staff do not go away just because you lose your ability to earn. Some of the typical things covered by business interruption are:
- rent, loss of income and wages
- marketing and advertising if a business is required to relocate
- loss of income/profit for the period the business was unable to operate.
Business compliance and regulation
Depending on your business type you may need to comply with a variety of business licence or local council permits to ensure your business is operating legally, and to comply with insurance. In Australia, each level of government (Local, State and Federal) has regulations that may apply to your business. To get a proper understanding of your regulatory obligations, you should seek information from each of the levels of government. To find out what regulations affect you:
- www.business.gov.au (Federal)
- blis.fairtrading.nsw.gov.au (or similar body in your state)
Local council permits also need to be considered in business contingency. An example exploded last year on Sydney’s Northern Beaches when Manly council changed the arrangements of seating permits, which saw two restaurants, Watervue and Cristals, fighting for their share of outdoor seating. This had a very damaging affect for both business and wasn’t a good promotion for the council as thousands of tourists and visitors walked down the Corso past “Sack Manly Council” signs.
Cover for business technology
Everyone knows the heartache of losing data on a computer. But how seriously could this affect your business? How good are your back-up systems? Is there an offsite copy of all of your data, accounts, contacts, and software licences?
Only recently I experienced a fatal hard drive error that saw my laptop die, which in the grand scheme should not be a major loss. I actually consider myself to be a power IT user, however I was still humbled by the inconvenience and loss of my laptop. Fortunately all my client-sensitive data was well protected on our password-protected server. However, in my role I use a large number of propriety specialist software packages that I have subscribed to. Not only had I lost all of these software programs (which were stored locally), I had also lost all of my purchasing and licence information. For a very tech-savvy person, I was struck hard with the reality that I was not fully prepared. This cost me a lot of time recontacting each of these software companies so they could reissue my licence information.
Businesses should always have an offsite copy of their data, including all accounting and financial information, email, passwords, and software licences.
Online back up services:
Disaster recovery
Businesses totally dependent on their IT infrastructure need to plan for potential outages or issues with their IT systems, and how this will affect their ability to earn money. Small businesses are more vulnerable to issues relating to disaster, as they often don’t have the resources to plan and prepare for disaster recovery.
