Planning is the primary part of any business. If you run a business, you might have heard a lot of talks on business plans and their respective risk management plans. You must be aware that writing a business plan in Sydney, Australia is like constructing a solid foundation for your business.
It builds a road map to your success and assists you in finding financial aid much easily if you get caught by loss.
Numerous studies also suggest that precise plans can only increase your growth potential by 30%, while the other 70% of your success depends upon the implementation of those plans.
As shown above, the risk management plan does not pertain to planning and assessing the situations, but to further handling and minimizing those risks via necessary actions.
How can writing a Risk management plan help your business?
As the business marketplace is flooded with companies who are locking their horns to be at number one, it becomes important to start your project with an accurate plan that includes possible issues that might have a positive or negative effect on your project’s objectives.
This plan, if built up efficiently:
● Lets you inspect the risks in your project & their impact on your business.
● Increases your chances of succeeding.
● Provides you accurate directions to meet your target.
● Lets you define responses in advance for unforeseen issues.
And how can you build up an efficient risk management plan? Only if you know what your business is about, who your competitors are and what risks does your business hold.
Follow these steps to find out, assess and control the risk factors:
● Identify risks
Using a checklist of possible hazards is the most disciplined process one can follow in the risk identification process. The best way to create this checklist is to consider past projects which can be valuable resources for identifying the potential risks in your upcoming project.
Business risk factors can be divided into four categories such as:
● Operational Risks – It refers to failure due to inadequate actions of external factors such as internal & external fraud, client & business practices, business interruption, etc.
● Strategic Risks – It includes economic slowdown, changes in government legislation etc.
● Credit Risk – It can occur due to the inappropriate behavior of debt payers.
● Reputational Risk – It refers to the possibility of spoiling the company’s reputation due to internal & external factors.
● Risk Measurement
There are possibilities that the risks you have added in your list might be insignificant. But there are chances for some of them to develop into a liability. So, the next step is to rank them.
Statistically ranking risks might prove impossible, but a simple qualitative classification will be enough for figuring out solutions effectively.
You can use a spreadsheet with the categories likelihood, consequences, to record all the risks you have identified while writing a business plan to have a better idea of how to manage it. But remember to revise this list periodically.
● Decide Strategies
Once you have identified and ranked the risks, you can proceed further to decide how to manage them. The strategies commonly used to minimize risks are: risk avoidance, risk mitigation, risk transfer and compensation.
It is often difficult to find out the best option to manage a specific risk. But one can proceed to the conclusion by balancing the actual cost of strategy implementation and the benefits derived from it.
Risk Avoidance focuses on doing a complete analysis before selecting your suppliers to avoid the maximum risk. Mitigation involves lowering the risk through continuous monitoring and checks so as to identify the risk at a much lower level.
The last two strategies are adopted by a smaller percentage of people as they deal with coping with the risk, rather than eliminating it. You can keep track of all such risk eliminating strategies while drafting your sample business plan.
A management team within the organization also plays an important part in controlling and minimizing risks. They need to determine whether the existing risks are still prevalent or whether the likelihood of these risks has increased or decreased.
Though, you fully understand the importance of planning your business objectives and highlighting risks associated with it, but with the help of an efficient tool, you will be able to handle it better.
Business plan management software, such as Business Propel, assists you in monitoring and measuring your progress periodically, even for your small business startup plans.
Monitoring your progress and losses can help you to manage your matters of finance and budgeting. So, utilizing a professional business management plan provider in your team will be a valuable addition. They will:
- Assist you in testing the strength and weaknesses of your business.
- Provide you comprehensive reports to give you an idea where your business is doing well.
- Advice to plan, refine and manage your current practices.
- Keep a track of your actions and progress.
- Keep you updated with the latest marketing trends.
So, seeking help from the professionals saves your investment and valuable time by figuring out the best solution to your issues in a timely fashion.
Following are some common errors in risk management plans:
- They are formally prepared but not regularly revised.
- They cover the area of risks that are easy to fix and avoids the difficult areas.
- They depend too much on insurance as a recovering strategy.
- They are not updated when insurance policies change.
So, it’s always a better idea to begin your business with a systematic approach.
Seek the assistance of qualitative business solutions providers, who own a set of risk assessment tools such as Business health checks, personalized assessment reports and business plan builders that helps you drive your business to the next level.