Business, like life, is filled with the unexpected. The unexpected in business can include losing a key customer or contract; a strong competitor enters the market (when least expected); losing your key employees; faulty or bad batch of product line; falling victim to fraud e.t.c. Events do happen at the most unanticipated times. In my role as a co-founder of PrognoStore in which I work closely with small business owners, below are some of the examples of what can be filed under ‘unexpected’ category:
- Your long serving shop manager resigns
- Loss of key data like customer lists, proposal documents etc
- A trusted business partner is no longer interested in the venture
- The bank calls up a long standing loan
- Website (ecommerce) hacked
If we agree the unexpected will happen. What can we do? Do we take it as an act of faith that nothing can be done? Or do we take steps to mitigate the loss as those situations unfold? I think the latter makes more sense.
Here are the 4 things you can do from today to protect yourself and your business from unexpected events:
1. Document Policies & Procedures
In business, a recurring cause of unpleasant events is the lack of policies and procedures. Take for instance what happens if you produce a faulty batch of products which is going to cost you a lot of money to reproduce or replace. Once you dig deeper, it’s common to find that there’s a lack of clear guidance on how to consistently carry out essential tasks. That’s why you’ve ended up with the faulty products in the first place. The underlying cause of the unfortunate event is ultimately the absence of policies and procedures.
How do you implement?
Document all required steps for key processes
You should have procedures laying out the required steps to perform tasks or deliver service. For example, for a shop attendant who serves in a fashion boutique, the procedures for alteration requests could be; introducing themselves, taking the customer details, measurement for alterations, offering alternative items and ensuring the customer is aware of returns policy. Detailing the procedures for delivering consistent great service to customers is what adds up to a great service environment.
2. Train All Staff
Now that you have policies and procedures in place for your organisation, the next step is to train your staff. This is important as there’s no point in having policies and procedures, if no one is aware of their existence or people don’t follow it. You should have dedicated training period for on boarding new employees, ensure that handover training is done when needed and mandatory training is in place for key tasks. Also worth remembering that employee training is one of the valuable investments any organisation can make. It’s a win/win outcome for your staff and the firm.
Periodic review of procedures and training
Procedures and training need to be regularly reviewed and updated. You can either do this quarterly or at least annually, to make improvements and keep them up to date. There should be a clear avenue for feedback to be collated on the impact of procedures and training as well.
Eliminate key man risks
Key man risk is simply the effect of losing one important member of the team. It seeks to highlight the dependency of crucial tasks or processes on a single person. This means their absence creates the risk that work wouldn’t be delivered as expected.
At this point, I must say you as the owner could be the ‘key man risk’ of your business. I know we all want to feel that without our input, the business will not survive. This while good for the ego, is actually bad for your business! Delegate tasks and responsibilities, empower your staff to work without your ‘permanent’ involvement and nurture your business managers to be future leaders.
How do you eliminate?
Review current processes and identify key man risks
You need to start with the simple question; ‘what tasks are key and can only be carried out by one person’? The answers will begin to give you an understanding of areas where key man risks exist in your firm. A complete review of the organisational structure, processes and tasks is essential to determine the existence of key man risks.
Training to remove dependency
Once the key man risks have been identified, cross training needs to be put in place to remove the dependency. Other team members must be capable of carrying out the tasks. A good indicator to know if cross training has been effective is to see if work can be carried out when team members go on holidays or are off sick.
3. Carry Out a SWOT Analysis
A SWOT analysis is a structured planning method used to evaluate the strengths, weaknesses, opportunities and threats involved in a project or in a business venture.
How to carry out?
The SWOT analysis entails you doing an analysis examining the Strength, Weakness, Opportunities and Threats of your organisation. Example of questions below can be considered;
What advantage does your firm have?
What do you do better than your competitors?
What could you improve in your firm?
What decency on other firms/people exists?
What should you concentrate on in the future?
What interesting trends are happening in your industry?
What obstacles are you facing?
What are your competitors doing?
4. Take Out Insurance
I will be the first to admit that insurance is not widely accepted yet, in the small business sector in Nigeria. However, for loads of cases, insurance is the exact instrument that will relieve the loss suffered by a business. If for instance, the fish farm in Ilorin has an unexplained sickness/virus wipe out its stock. The best remedy at that point is a solution which allows the fish farmer repurchases another stock, which means having a business insurance policy in place, before the event.
Although it might appear that the insurance sector is under-developed, there has been interesting recent developments in the industry. Take for instance in car insurance, the emergence of startups like AutoGenius and TopCheck has brought transparency and choice to the market.
Of course another form of ‘insurance’ is saving for the ‘rainy day’. This means that you’re better served having some cash in the bank, which acts as a buffer when the unexpected occurs.
Do you agree with the above to mitigate the impact of the unexpected? As usual, keen to know your thoughts in the comments.