Businesses Risk that Must be Understood | Global Business, Global Management

The term in the business world, Cash is the King shouldn’t be denied, it is almost absolutely truth, however often overlooked. Many entrepreneurs too late to remember the importance of having a cash or sufficient cash for the difficult times in the course of its business.

“Number ONE reason why Businesses Fail because of Entrepreneurs Out of Cash!” It’s very important to always remember and understand in running your business.

Economic recession that is always present in the business world, actually has reminded us that what can happen in business is often unpredictable, and the possibility of occurrence is when you least expect it at all. Things like this has ever happened to me at the time of a national monetary crisis better known as the Monetary Crisis in this country in the year 1997 – 1998, which resulted in huge losses worth billions of dollars within the scope of my business. The next crisis that also had an effect on my business, although its influence is minor in 2008.

Based on the experience of losing up to billions of dollars, then I think that the way to anticipate and manage business risks, not only saw the reports in a matter of weeks or months, but also anticipate the potential for any adverse conditions that will happen, for one, three or even five years from now.

As a Risk Barometer, then I have to build it in daily business plan, such as cash flow valuation quarterly, monthly and weekly. As an entrepreneur, I have always connected to the business’ cash flow, so if things happen that are important and urgent to immediately take a decision, then I can quickly make changes.

Always pay attention more closely, but widespread and thorough in the business is important, because to look at the overall economic conditions, including interest rates, inflation and how much unemployment, which it certainly affects the values of consumers and currencies. This knowledge will help you make the right decisions about how to react to the changes and shifts occurring in the business world, to then rearrange the business strategy.

Here are six additional risks that can threaten your company and some quick recipes to overcome them. I’m just sharing it, not at all mean to patronize you.

1. Misguided About Your Customer Service.

Entrepreneurs are often too focused on serving existing clients or trying to always meet each customer’s order, so that rendered them unable to realize that his business began to slow. Actually, that’s how it should be the attitude to customers, but should also look at other things that might be influential on the business road. If employers to forget the influence of the addition of customers, so if business starts to slow down, they are slow as well know it, so consequently they fail to maintain the good name of “track record” business.

Prescription: If the business begins to slow down, immediately reacted. Cut the cost is not very important, so you do not spend more than the cash inside. Shift in marketing strategies can help, such as expanding your product line or adjust your price. In economic conditions like these, you can not just expect a way out of trouble just as blindly.

2. Erroneous Managing Cash or Cash.

CEOs often delegate to their balance sheet analysis, CFO or accountant from outside the company. But as an entrepreneur, understanding your company’s cash flow remains very important to look at the overall financial health of companies. Too many CEOs off the responsibility on cash flow, and only find out if there is a cash flow problem is chaotic.

Recipe: Setting targets and ranges for gross and net margins.Whether it is weekly, monthly or quarterly, and berkalau to review your finances to determine whether the margins you stay on the right track.

3. Anticipation of Risks from your vendor or supplier.

As dangerous as having only a handful of customers, so if you only have a few vendors or suppliers, because they can arbitrarily decide to raise prices so it will kill your profits. Never allow your business the greatest source of risk comes from vendors or suppliers that number only one or two vendors or suppliers, because the level of dependence will put your business in very risky conditions.

Recipe: Look for a lot of vendors or suppliers to your business.Even if you do not want to use a lot of vendors or suppliers, at least you have identified alternative sources and find out the terms and prices of many vemdor or suppliers. If there is only one vendor or supplier to the business you do, then look for a vendor company or other suppliers, which you can partner with to offer complementary services to your clients.

For example, a company that sells IT desktop management services to corporate clients typically work with software providers.The company may consider selling more services, such as virus protection, Web browsing security protection or bandwidth management, for the same customers. And, the software used to provide other services could come from another vendor or supplier.

4. Your Account records may be deceptive.

What is worse than not getting the sales? The answer is “Creating a sales and not paid!” Almost every business has a bill, and they can not collect the money coming from sales, or your customers are consistently delinquent. Therefore, you need to understand about your business and accounts receivable of you who actually have been “naughty and cheat” you.

Recipe: Monitor continued financial health of your customers.Calling your customers know that as soon as payment is late. Set up a practical way to find rogue customers, including carefully to charge your accounts receivable. Create a guide line of dubious accounts in the general ledger so you can understand and quick thinking to act, what you should do.

5. Credit Risk Business.

The pain from the credit crisis still continues. Interest business loans that range from 12-13% per year would still heavy enough for the business in running the economy, especially if 100% of your business still relies on business credit.

Recipe: Understand a pristine balance sheet. Just because you are creditworthy, there is even an additional “cashback” does not mean you should be proud of let alone negligent that it was actually entered in the calculation of your debt, which in time must be paid in full. Wiser if you adjust the concrete ability to scale your business credit you have to bear. And business loans must be 100% used to develop your business venture.

6. Legal Risk

Being sued due to erroneous data, the product is defective or dangerous working conditions is a real possibility of violations that could happen to your business.

Recipe: Setting the standard operational procedures and protocols for everything related to your business is a precaution that can maintain and minimize the occurrence of violations due to human error. If possible with the technology, it uses multi-level verification process with software tailored to the needs, of course, will further make your business avoid the mistakes that result in the risk of applicable laws.