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MANAGING RISK FOR BUSINESS OWNERS

| NOV 05, 2019

People often associate “risk” with big things, like a fire, accident, or major theft. But risk can be more subtle, like rising raw material prices or a slow sales period. And what about the risk of losing your top salesperson or your most experienced technician?
Managing risk is a multilayered process for businesses who need to balance the cost of protection, with the chances of something going awry. To integrate a wide mix of financial products, processes and tools, businesses benefit from working with a business advisor who can help bring it all together.

 

  • PROTECT YOUR BUSINESS WITH INSURANCE, SAVINGS, AND FINANCIAL FLEXIBILITY
    Start by ensuring continuity  in a range  of scenarios.  Insurance   is a proven and necessary tool for major events, and don’t forget “key man” insurance for people critical to business success. For subtle or slow-moving risks, a cash reserve or other financing can help weather a temporary issue or buy time to readjust to new realities.
     
  • SUCCESSION PLANNING HELPS BUSINESSES – AND PEOPLE
    Many small businesses delay or avoid talking about succession plans. They shouldn’t. In small companies, talk of succession planning may seem unnecessary or even “bad luck.” But planning what happens to your business not only ensures business continuity, it relieves families of the burden of sorting out ownership and is crucial for the well-being of employees and partners, too.
     
  • INSTALL FRAUD PROTECTION TOOLS AND POLICIES – LIKE REDUCING PAPER
    Fraud is a top risk for small businesses, and the sources can be surprising. Work with a business advisor to address your business’s greatest fraud risks, whether it be email fraud, internal financial controls, hacking of customer data or theft of intellectual property. And move transactions to digital systems – lost and misused paper checks and records are still a leading cause of fraud.
     
  • CREATE AND SHARE A DISASTER RECOVERY PLAN
    You don’t have to know exactly what your risks are to have a plan. Start with the most likely issues, such as weather closures – what triggers the plan, how are employees notified, and what happens? Then develop a plan assuming a disruption for a week or longer, or scenarios like an office closure, a server going down, or recovering from a major loss. Make sure your employees know there is a plan and where to find it.
     
  • BE PROACTIVE DURING AN EMERGENCY
    One key mistake many businesses make in a crisis is hunkering down right when they need help the most. Business advisors have seen it before, and your business can benefit from their experience. Build relationships with people you trust when things are good. Banks can help with emergency financing, and business advisors can point you to resources you might not find on your own. Even risks from non-emergencies like a business sale can be mitigated more effectively if advisors are in the loop, so don’t be shy when change is on the horizon.

Business owners are optimists by nature. Bankers and business advisors are too – your success is our success, after all. Talk to an Alerus advisor about the pragmatic things that can help protect your success even when things don’t go as planned. The good news is that risk management is largely about thinking ahead, and a business advisor who has seen a lot can help you make smart choices.

 

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