The vulnerable spot, almost imperceptible at first, exposes a business to great risk.
A service business, 25 years old, one of the top such businesses in the country, employed an accountant who chiselled a large sum of money from the business. Strike one. The business accepted a large government agency contract, did all the print work, paid the supplier but the agency was never formed. The service business couldn’t recover their money. Strike two. Game over.
A near-retired person invested in a motor business, signed surety for the business and went on a wild spending spree with the owner. They woke up in a drunken stupor to find out the cash in the business had run dry.
A magazine publisher ran into a tough spot with shrinking advertising revenues. Unable to pay his print bill and the business in tatters, he decided to not lose face, couldn’t take the pressure anymore … and put a gun to his head and pulled the trigger.
Business owners and their businesses possess inherent vulnerable spots that can ruin their business quickly. It can be greed, ego, alcoholism or poor business judgement. These are some of the big ones but there are many others.
What are the weak spots or potential fail points in your small business?
Can you identify them?
What will you do to avoid them?
Small business owners and entrepreneurs face risk in their business – their market risk and business or company risk. The investment analysts call these alpha and beta. Fancy names for what are essentially the risk that your industry sector has and the risks that are embedded in your business that you may not even be aware of.
In these challenging economic times, it’s important to identify what could be potentially vulnerable spots in your business. Customers demand could plummet, technology could quickly become obsolete or a new competitor could gobble your market share with rapidity.
Yet people can often present the biggest risk or vulnerability. Especially in economic times where an unethical act could ruin your business overnight. This not only includes the people in your business but the people you do business with, your customers and suppliers.
Everything carries risk in business and life. Often just being aware of what could go wrong and being wary of what could be going on in your business is enough. Detect smoke early before you have a blazing fire on your hands.