Risk management plan for small business

Take these steps to put an initial risk management plan into place at your company.

September 09, 2010

Risk is an inherent part of being in business. It can be managed and its adverse outcomes can be mitigated. The greatest challenge for small business owners is to find the proper balance between peace of mind and profitability. Trying to completely eliminate risk from your business is unrealistic and can be prohibitively expensive or cause you to institute policies that may be so risk averse that your business never grows.

When many business owners think about “risk management” it’s usually limited to purchasing standard insurance protection without much consideration for other ways to protect the business. Risk management can be very complex, but it doesn’t have to be at first. Get started with a simple, easy to follow plan for managing and mitigating business risks and if needed expand from there.

Take these steps to put an initial risk management plan into place at your company:

First: identify risks

Some risks are common to most or all businesses. Others are very specific to your business and only you as the owner can know them. The best way to approach this is to use a standard risks checklist as a start and then add to it based on your specific expertise. The Small Business Administration provides a Small Business Insurance and Risk Management guide which addresses potential risks.

Some initial risks to think about are:

  • Property losses – typically occur from physical damage, loss of use and/or criminal activity.
  • Business interruption losses – occurs if your business stops selling for some reason (say because of a fire). In addition to the property losses incurred, the company would not be able to produce goods and sell them. This “interruption in your business activities” can be protected.
  • Liability losses – refer to legal liability for damages or injury caused to others by your company.
  • Key person losses – refer to the costs associated with an important employee or owner becoming sick, disabled or dying. The impact of a key person loss on a small business can be catastrophic.
  • Injury to employees – refers to the costs associated with an employee becoming injured while at work.

AuditNet.org provides a good risk assessment survey and mapping document at no cost for download.

Second: determine your company’s vulnerability for each risk

McGraw-Hill School for Startups: The Breakthrough Course for Guaranteeing Small Business Success in 90 Days or Less
Book (McGraw-Hill)
2005-12-11 06:52:45 by -

I've read a lo tof responses...

I've witnessed several ways in which a working class person or kid growing up in a poor area can dramatically improve their financial status in America:
1) Get an education (whether that be a skilled trade or college degree)
2) Own a home (Even if you own a small home, the tax benefits and possibility for the appreciation of value is well worth it)
3) Invest (Educate yourself on stocks/bonds/retirement plans. Let the money you can save work for you)
4) Start a business (The tax benefits abound for business owners. It's not always easy to start a business but if you get the opportunity it might pay off many times over)
5) Get married and stay married

2003-03-13 12:18:08 by INFOman

Info on self employed

NEW YORK (CBS.MW) - Wealthier Americans looking to boost their retirement plans and take heftier tax deductions for 2002 can act before year end to benefit from recent tax-law changes.
Small business owners and self-employed professionals such as doctors, lawyers and dentists who fund their own pensions can put more money into their plans. Since the contributions are tax deductible, they would lower their taxes.
For instance, a doctor earning $200,000 a year can put up to $130,287 into his plan at age 52 and deduct the entire amount, Nissenbaum said.
A hefty tax break
A defined benefit plan is a company retirement plan that specifies how much money is paid to retirees for life - usually a monthly sum

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