Don’t Let Threats Jeopardize Your Business
June 21, 2018
Every business regardless of size will always have numerous threats that can jeopardize the business and profitability at any point in time. Some threats may be internal while others might be external. Regardless of the type of threat, plans must be made to either eliminate the threat if possible or minimize the negative effects as much as possible if the threat does materialize.
Some examples of potential threats might be:
• Employee turnover
• Lack of cross-training
• Equipment breakdowns
• Lack of adequate financial resources
• Poor internal controls
• Non-responsive customer service and follow-up
• Narrow product or service line
• Small customer base
• New competition
• Existing competition with superior products and services
• Less expensive foreign imports
• New taxes or business regulations
• Shift in customer or supplier base
• Tight credit market
• Erosion of profit margin due to vendor pricing or major customer bargaining power
• Weather related problems
All threats can hinder a company’s profitability and competitive edge. Although a business has a certain amount of control over internal threats, it usually has little or no control over external ones. A business must foresee these threatening elements and know in advance what course of action to take as soon as a threat is clearly identified.
Although older threats will continue to exist and action must be taken to neutralize or lessen those threats if they materialize, new threats will continue to arise. Therefore, a business owner should be in a constant state of threat “prediction and pro-action,” so the negative effects of potential threats can be lessened, as much as possible. If no action is taken on potential threats, a company runs the risk of losing profits, their competitive edge in the marketplace, or even the entire business.
Play the “what if” game when thinking about potential threats. What if this happens, what am I going to do? Although a threat might be beyond your control, the threat, nonetheless, must still be dealt with if it arises. Plan in advance what actions you will take if possible known threats arise.
Understanding potential business threats is another form of planning not unlike other types of planning that every business should do continuously. Planning involves reviewing one component in a business, setting goals and objectives for that component, deciding on a realistic timeline, evaluating alternatives, making a decision, executing action, and then measuring the action to see if the intended goal was achieved. Potential threats in a business can basically be handled in the same manner. Understand the threat, decide on alternative courses of action if the threat materializes, and predict what the measured effect will be on the threat based on the action that would be taken. If the predicted outcome is not positive enough for the potential threat, then different alternative choices should be reviewed.
Planning for a potential threat is much like purchasing insurance. It helps to safeguard a business in case unexpected events becomes reality. It is far better to be overprepared then underprepared. If a potential threat never materializes, then the planning is like purchasing insurance that is never needed. It is still a business necessity.