Many small businesses that are in the early stages of growth do not put a very big emphasis on risk management. Unfortunately, it is not just large corporations who are at risk for lawsuits and other detrimental claims against them. Even a small startup can face major risks. In fact, in many cases, a small business is at more of a risk than a corporation simply due to the fact that they are less prepared. In many situations, not having a proper risk management strategy in place can lead to issues with accessing working capital and traditional funding. If you are currently implementing alternative funding solutions, such as asset-based lending, make sure that you are also putting together a quality risk management strategy to ensure your business can utilize working capital effectively for growth, rather than funding a lawsuit.
Check out the following questions that can help you dive into your risk management strategy and demonstrate the importance of having this plan in place.
What Unique Risks Does Your Business Face?
The first thing you need to do when planning out a risk management strategy is to consider what unique risks your business might be facing. While there are general liability risks that any company faces, there are some risks that are business specific. For example, any company can be at risk for an employee who gets injured on the job, but a tech company might be at more risk of a cybersecurity lawsuit. Restaurants face liquor-related liabilities and foodborne illness risks.
Each company has its own unique areas where risks are particularly high. Just because you aren’t serving a plate of food to customers or employing contractors who swing hammers doesn’t mean you don’t have your own set of risks to worry about. If you aren’t quite sure where your biggest risks lie, invest in a risk assessment from a professional consultant. This can help you hone in on areas where you can improve and will ensure that you know what insurance policies you should be carrying.
Have You Negotiated The Best Possible Insurance Policies?
Speaking of insurance policies, are you certain you have the best rates? Small businesses can wind up spending astronomical amounts on insurance policies simply because they did not shop around enough or implement the right preventative solutions. While there is no doubt that you need insurance as part of your risk management strategy, don’t rely on policies alone. When you work on preventative measures as well as look for the best insurance rates possible, you can lower your costs while improving your protection.
Do You Have An Employee’s Handbook?
In many cases, it is the smallest detail that can be overlooked and can lead to increased risk for a young business. This is why startups and small business are often at the greatest risk for a lawsuit. They underestimate the risks, which leads to important measures being skipped that could have offered improved protection.
For example, do you have an employee’s handbook that outlines regulations and policies at your company? Maybe you have a small team and this led you to think that there is no need for such HR practices. The problem is that in many small companies because there is no HR department there is no thought about the risks that HR helps to mitigate. This can open up your small business to an array of lawsuits. Even if there are just five of you working in your office and you think you know all of your team members extremely well, you should be prepared for the worst. A handbook that outlines policies, such as your sexual harassment policy, can go a long way in protecting you down the road. Without such a document in place, you have no proof that you instituted the right policies in your company.
No matter how little your company currently is, take the time to put together a lawyer-reviewed handbook and provide training to your team.
What Are Your Regulations During The Hiring Process?
How do you handle the hiring process? Did you know that there are major risks even during the early stages of hiring someone? Make sure that you have a clearly documented process for how you hire people. Try to weed out candidates you aren’t interested in before they ever step foot in your office for an interview. This can all help to lower your risk of a lawsuit due to you rejecting an applicant. If you aren’t sure how to best handle the hiring process, speak to your business lawyer and work on building out the right documentation.
Has A Lawsuit Left You In Need Of New Funding?
Unfortunately, lawsuits can wind up costing your company in big ways. If you have suffered a major financial loss due to a risk you never saw coming, it can put your business in a bind. Without the right working capital, your business might be facing serious issues. If you are worried about making payroll in the next few months or concerned about your ability to grow your business due to a recent loss, there are alternative funding solutions available. When traditional banking methods and funding solutions are not a viable option for your company, we can help. At the Commercial Finance Group, we offer unique funding solutions for businesses who find themselves in need of alternative options. We can help you access asset-based lending, which offers you a way to get back on track. Asset-based lending allows small businesses the chance to leverage what they have to spur further growth.This can be an ideal solution when you are in need of flexible working capital. Reach out today to learn more.
