No matter how careful and systematic your business decisions are, you will always face threats to your operations. The good news is you can reduce negative impacts on your business by mitigating these risks.
In our previous instalments, we tackled some vital elements in business from corporate governance, insurance and cybersecurity to employees.
For the third part of our four-part series, we’ll review three other vital components — managing growth, customer service and setting targets.
Measuring Growth Warrants Long-Term Survival
It is crucial to measure business growth to see how its variables change over time. For example, if your sales skyrocket or when business is slow, you can analyse the factors affecting it and use this information to take appropriate action to drive business performance.
When your business is in the start-up or growth stage, you should track cash flow and the burning cash rate to manage growth. Keeping a positive cash flow ensures stability and you can mitigate risk by creating a cash flow forecast and there are tools that can guide you in the process — they help predict cash gaps and allow for solutions in advance.
Meanwhile, a high burn rate of cash, is not good for a business and not burning enough cash, signals that you aren’t investing enough in the business — this needs to be managed.
Both scenarios have high risks and to mitigate these risks, it is critical to manage the cash well and strive for growth.
Practice Good Customer Service to Reduce Risks
Building good relationships with your customers is essential to achieve success. In this age, every customer has the power to build or destroy your reputation. A single trending post on social media about a negative experience can trigger other users to boycott your brand, which can lead to huge monetary losses — this is a serious threat.
The most effective risk mitigation strategy for customer-related threats is to teach and train your entire team (both customer-facing and back-end departments) on the tenets of good customer service.
Remember this: customer service is the make-or-break point of building a solid customer base. Provide an excellent customer experience and you will likely encourage a significant percentage of your customers to make repeat purchases with you.
Set SMART Expectations
Align your expectations with the SMART criteria and set targets accordingly — targets that are Specific, Measurable, Attainable, Relevant and Time-bound. Doing so will help you set achievable and concrete targets that will guide your business in making important business and financial decisions.
Tracking performance and reviewing results will give you the best possible chance of improving your business performance by making informed decisions.
In Conclusion
These three risk mitigation strategies may seem like small steps to strengthen the foundation of your business. But when combined, it can help you withstand possible threats.
Setting a standard measure for growth and tracking cash is necessary to track business performance. Also, involving your entire team with customer service initiatives is the starting point to creating long-term customer relationships and lastly, setting SMART expectations can help you see your targets clearly and make crucial decisions on the back of that.
Let Us Help
If your business has a turnover of over $1 million, ABJ Solutions is offering a complimentary one-hour meeting to help answer questions and model critical decisions with you. Get in touch with us today so that we can help guide you through these challenging times.
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