risk

Running any business involves risk.  Entrepreneurs need to be able to assess the risk in their company and make sure they’re protecting themselves with insurance.

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Show Notes

Running any business involves risk.  Entrepreneurs need to be able to assess the risk in their company and make sure they’re protecting themselves with insurance.  On today’s episode we talk to insurance expert Michael McMahon about how entrepreneurs can assess risk and work with their insurance provider to reduce risk in their business.  We cover several tips and topics in business insurance so that you can manage risk effectively.

Key Points

*Our guest, Michael McMahon, is a Certified Insurance Representative (CISR) and a Certified Insurance Counselor (CIC) for the McMahon Insurance Agency headquartered in Ocean City, New Jersey.

*The McMahon agency has grown from a small 2-person agency in the early 1980’s to one that currently employs nearly 40 employees and has 3 locations.

*Michael’s experience spans several roles in the insurance field and he advises clients on several aspects of insurance and risk management.

*Based on a survey of corporate counsels, we discuss the top 3 types of disputes they’re facing and the types of insurance policies that help cover companies in those types of disputes.

*Our guest highlights General Liability, Employment Practices and Cyber Liability and Data Breach as types of policies that help in those types of disputes, noting that Cyber Liability is often overlooked by businesses and poses increasing risk.

*Find out the difference between general liability and professional liability insurance and what each covers.

*Hear why it’s important to consider using an Umbrella Policy to cover actions brought against companies in litigation especially in light of settlement amounts in today’s current society.

*Michael explains why having employees means that you need an Employment Practices policy and what is covered.

*Find out the types of things that are covered for D&O Liability and why if you serve on the board of any entity this policy is important to have to protect you personally.

*Find out what most businesses need and the most common types of policies entrepreneurs should consider for their business.

*Michael shares the types of things you can do in your business to manage both risk and costs.

*Find out what our guest thinks is one of the biggest exposure and risk areas in running a business.

*Our guest provides us with several tips on policy reviews with your agent and the importance of understanding the risk in your specific industry.

*Get tips on what to look for in an insurance agent and the caution Michael notes about cost savings versus adequate coverages.

*Michael gives us two great pieces of information on The Risk of BYOD and shares a cool tool that is located on his website called Clickable Coverage.  (See below for direct links)

About Michael McMahon

Michael McMahon is an Account Executive & Claims Manager for McMahon Insurance Agency. He works with clients to design insurance programs for both business and personal exposures, as well as working closely with our carriers and adjusters to ensure claims are handled quickly and fairly. He maintains the Certified Insurance Service Representative (CISR), and Certified Insurance Counselor (CIC) designations, and is currently pursuing the Associate in Flood Insurance (ANFI) designation. In addition, Michael is member of the Board of Trustees at the Ocean City Historical Museum as well as a member of the Ocean City Citizen’s Emergency Response Team. He lives with his wife and daughter in Upper Twp., NJ.

Resources and Links

Get the information in the blog post mentioned in this episode – The Risks of BYOD and complimentary whitepaper here 

Not sure what policies are right for your business? Find out using Clickable Coverage at McMahon Insurance Agency’s website using this link

Learn more about the McMahon Insurance Agency on their website here

Follow McMahon Insurance Agency on Facebook

You can also follow them on Twitter here

Like to learn more about business risk?  Check out this episode on the types of risk and tips on how to identify risk in your own business here

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Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

Lisa Roberts is a business operations consultant who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here

Running a business involves some level of risk no matter what type of business you’re in.  Entrepreneurs need to identify risk, assess it and then manage it.

To listen to the episode hit the play button.

To download the episode, right click on this link  and choose Save Target As.  Go to the folder where you want to save the recording on your device and click Save or Enter.

You can make it easier to get upcoming episodes by subscribing to the show on iTunes . Subscribing to the show will automatically download the episodes on your preferred listening device so you can listen to them when and where you want.

And hey, if you like what you hear, please leave the show a great rating and review while you are there on iTunes.

Show Notes

Running a business involves some level of risk no matter what type of business you’re in.  In order to successfully manage risk, it’s important that you identify the potential threats you face and take steps to management and mitigate the risk.  In this episode, we’ll identify the main risk categories and explain the types of things you need to look for in your business. We’ll also discuss how you can start to assess risks and address it your own business.

Key Points

*Common categories include Operational, Business, Legal, Strategic and Compliance

*Operational involves the risk that something about your processes, policies or systems have failed or are inadequate in some way. It can include things like system breakdowns, errors and problems with your business practices.

*Business risk surrounds running your operations profitably.  Financial risk falls under this category as well and that has to do with the ability to meet your debt obligations. Examples include not generating enough revenue or cash to operate your business, not having enough demand for your products or the risk that you default on your obligations.

*Legal involves your contracts, legal entity, disputes and lawsuits.  It typically involves your company agreements and includes things like shareholder lawsuits, vendor disputes, contract violations, product lawsuits etc.

*Compliance relates to laws and regulation that are required by some government entity.  Examples include employment laws, tax and financial reporting requirements, industry specific related regulations etc.

*Strategic is the risk that come about based on your strategy or plans.  The risk that your strategy failed in some way, you are unable to compete effectively or that something in your business plan put your business at risk.

*Two other categories have gotten attention in recent years and they are Emerging Risk and Reputation Risk.  Emerging relates to changes that may be emerging like new disruptive technologies, new regulations etc.  Reputation refers to situations that have put your company’s brand and reputation in danger due to things like bad press, product recalls, cyber security issues etc.

*A business can never fully eliminate it, but they can take concrete steps to mitigate it in their business.

*An assessment can be done with your management team and business advisers to help you identify and address the risk in your business.

*The steps to perform an assessment include identifying, assessing, prioritizing and addressing the risk factors in your business.

*Assessing each risk involves determining the impact by estimating the likelihood that it happens and the potential cost to your business.

*Addressing it can be done through business policies and procedures as well as creating checks and balances to help mitigate that particular risk.

*It’s important to get assistance from professionals such as your insurance, legal or risk management professional so that you are able to clearly define and address your company’s particular profile.

Resources and Links

Lisa mentioned a survey at the end of the show that looked at the types of litigation that are trending in 2016.  Here is a link to the press release about that survey with links to access the survey report itself.

 

Sign Up to Get Updates

Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

Lisa Roberts is a business operations consultant who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here by following the link.

In this episode Lisa’s tells us a story about a company that in one phone call found that it was going to lose half its sales.

To listen to the episode hit the play button.

To download the episode, right click on this link  and choose Save Target As.  Go to the folder where you want to save the recording on your device and click Save or Enter.

Make it easier to get upcoming episodes by subscribing to the show on iTunes . Subscribing to the show will automatically download the episodes on your preferred listening device so you can listen to them when and where you want. And hey, if you like what you hear, please leave the show a great rating and review while you are there on iTunes.

Show Notes

In this episode Lisa Roberts uses a real life experience to illustrate the problem that some companies can face.  She refers to it as “sales risk” and that is when a company hasn’t taken the steps to develop their market or a plan to avoid becoming too dependent on a few customers or too narrow of a market segment.

Lisa explains what happened when her company suddenly lost half of its revenue and why it found itself in that predicament. She explain the types of things that you should watch out for in your own business to identify looming problems and risk factors as well as explain ways you can avoid this in your own business.

Key Points

*A big disruption in your business, like losing a big portion of your sales all at once, will likely change the trajectory of your company.

*Having too much concentration or dependence on a few customers are risks not only your sales but in some cases a risk to your core operations.

*Entrepreneurs need to make sure they have strategies to develop their market and a plan to market their products consistently to add to prospects to the mix.

*Businesses need to take steps recognize customer and market dependencies by having a clear understanding of their sales mix.

*Other risk factors to your sales are things like industry changes, disruptive products and services, competition and also your own company’s ability to address and change with your market.

*Lisa explains in simple terms and examples ways industry changes occur due to changing industry landscape and disruptive products.

*She talks about ways entrepreneurs can take steps to guard against your sales being at risk through monitoring, marketing, innovation, packaging and delivery methods.

*Winnie and Lisa share examples of how not listening to your customer and market and where things are going can hurt your sales and put additional risk on your company’s sales.

Resources and Links

For further reading check out some of Lisa’s posts on the Business Rx Blog:

Are Your Business Sales at Risk?

How Secure is Your Customer Base?

 

Note: Links in this post may be affiliate links.  Lisa Roberts is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com.

Sign Up to Get Updates

Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

Lisa Roberts is a business operations consultant who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here

One pain point for business owners is keeping and maintaining good business records.  Too often businesses fall behind in their recordkeeping, which will, more than likely, get them into even deeper problems.

To listen to the episode hit the play button.

To download the episode, right click on this link  and choose Save Target As.  Go to the folder where you want to save the recording on your device and click Save or Enter.

Make it easier to get upcoming episodes by subscribing to the show on iTunes . Subscribing to the show will automatically download the episodes on your preferred listening device so you can listen to them when and where you want. And hey, if you like what you hear, please leave the show a great rating and review while you are there on iTunes.

Show Notes

One pain point for business owners is keeping and maintaining good business records.  Too often businesses fall behind in their recordkeeping, which will, more than likely, get them into even deeper problems. Not keeping timely records will almost always cause additional problems for a business both financially and legally. In this episode we will look at the symptoms of bad recordkeeping, what problems it can cause and what you need to do about it.

Key Points

*Recordkeeping for your business includes both financial and legal records. Not maintaining good records in your business creates many risks that can cause several problems for you and your business.

*Bad recordkeeping can cause problems with your business relationships with customers, vendors and employees due to errors, oversight and lost or missing records.

*Your records need to be maintained and safeguarded to avoid problems with security and privacy as well.

*Bad recordkeeping can result in costly error-ridden catch-up exercises, late payments with taxing authorities and other costly financial problems.

*Requirements of tax authorities and other governmental regulations place importance on having good accurate records for compliance.  Bad recordkeeping places your company at a big disadvantage if there is ever an audit or review by a regulatory authority.

*Clear responsibility for records and records management need to be defined in a company.

*Systems and procedures need to ensure that there is an audit trail in place for your financial records.

*Your business needs to research what requirements you have for recordkeeping based on your type of business and the industry in which you operate.

*Tips on making sure transactions are captured and recorded and up to date are also shared in the episode.

*Due to the importance of the accounting and financial role in recordkeeping, we highlight the differences between a bookkeeper and an accountant in the episode.

*For Human Resource records and legal records need to be managed as well as we highlight some of the important types of records and how to get some guidance about those records.

*We provide you with some tips on where you can get help if you need advice in this area.

Resources and Links to Learn More

Here are some links to sites that can give you guidance on the types of records and how they should be maintained and for how long. The information here is for the United States only.

Disclaimer:  These sites may change the information in these links or move the location of the information contained in the links.  It is highly recommended that you consult with your legal and accounting advisors as well.

Internal Revenue Service Small Business Record keeping information

Internal Revenue Service Tax Topics Recordkeeping

Department of Labor – OSHA recordkeeping information

U.S. Department of Labor Fact Sheet #21: Recordkeeping Requirements under the Fair Labor Standards Act (FLSA)

Lisa Roberts is a business operations specialist who advises growth company entrepreneurs in successfully managing growth and the challenges they face along the way. She has over 25 years of experience in operations, finance and administration and spent several years in executive roles at a high growth company. She recognizes that there is a fine line between success and failure in a growing business and that entrepreneurs need to focus on managing finances, creating a sound operation and employ good business practices to stay on track.   You can find out more about her here .

Sign Up to Get Updates

Get all the updates and information Lisa shares from Business Rx and the Healthy Business Healthy Profits show! You’ll get information, tips and strategies on growing a healthy successful business. Don’t worry, I won’t bombard you with emails.  At most, you’ll get something from me every few weeks. You can sign up  Here

“Our largest customer just told us that they’re going in a different direction and don’t need us anymore!” – VP of Sales

I’ll never forget the look on that executive’s face. Shock, disbelief and fear; deep fear.

Almost 50% of our sales were going away.  A customer that paid us for our services, month in and month out for about 15 years was gone, just like that.

And with that, a few years of struggle began for the company that I had just started working for less than two years before. Replacing that amount of sales was going to take a while.

How can companies avoid this? Is there a way to, at least, reduce the risk of it happening to your business? What things should you look for in your business to make sure the same fate doesn’t happen to you?

Five Reasons Your Sales Numbers Are At Riskwarning-838655_1280-300x259[1]

Dependent on a Few Customers

This is what happened to my company. We were moving happily along with this large international customer providing them technical services for 15 years.  During our business relationship, we worked hard and gave them very good service.  Since they were by far the biggest customer, they got a lot of our attention.  Sure, it was great to have a customer like that; the sales came in like clockwork.  The problem was that we didn’t do a very good job managing our sales and marketing to be less dependent on a few customers. Because we hadn’t grown enough, the loss of that customer was a huge problem.  When we got the news, it was like a death in the family.

Industry / Economic Changes

I think we all understand how the economy can affect sales because we’ve been living (and struggling) through it the last several years. Industry changes can be a little different depending on your own industry. For example, in construction, the industry shifted when the traditional single family home gave way to the even larger houses a few years ago. Now, something called “tiny houses” is gaining traction in some regions. For restaurants trends like “fast-casual”, mobile ordering and even rising food costs are changing the landscape for the industry. Technology has affected many industries especially in media where digital music, streaming movies, and online media are doing a number on the music, Movie Theater and newspaper industries. Industry and economics can put your sales at risk if you don’t keep up and adapt to the changes.

Commoditization

Commoditization puts sales at risk too. Many products became commodities over the years and some have even become “un-commoditized”. A commodity is a product or service that is mass-produced, with relatively little variation and is widely available. Since it’s widely available with little variation, consumers will be more price sensitive. Think sugar. You typically don’t care about the brand, you just need sugar to make cookies or sweeten your coffee.  Coffee was another example until Starbucks®, gourmet coffee and K-Cups came along.  Now, stroll down the coffee aisle in any grocery store, there are multiple flavors, strengths and brewing methods to choose from.  When I started drinking coffee in college there wasn’t much choice – coffee was coffee!

Competition

Competition puts additional risk on your sales. There is always someone out there who will compete either directly or indirectly with your business. Direct competition competes on product or service, price and convenience. Direct competition tends to have similar overall business goals.  Examples in the restaurant business might be McDonalds® vs. Wendy’s®. Indirect competition will compete with similar products or services but may differ in its business goal. Indirect for the restaurant industry might be McDonalds® vs. TGI Fridays®; you can get a hamburger at both but they have different business goals as well as variations in the products they offer.  Replacement competition offer similar products and have similar business goals but may be different in the way they reach that goal. One example that has changed an industry is the digital camera; this replacement competition has all but put the film and film camera industries out of business.  Knowing who your main competitors are and what their strengths, weaknesses and goals are will benefit you when trying to ward off the competition.

Your Own Company

The last reason your sales could be at risk may be what you’re doing or not doing. It is easy when you’ve been in business awhile to forget what got you here and what differentiates you from other businesses offering the same product or service. Customers change and what they value can change too.   If you’re losing sales, it may be that you need to look inward to make sure what you offer still provides your customers the quality, value and good service that got you customers in the first place.  Letting any of these slip can create an opportunity for customers to look for competitors to fill their needs. Listening to your customers and prospects can also help you make improvements so that you stay competitive and on top of your game.

Now that we’ve identified some of the reasons that your sales are at risk, let’s look at some things you can do to combat these in your own business.  Here are some things that you can consider:

  • Grow and expand

In the company that I worked for they didn’t try to expand until after they lost their biggest customer.  For us, we relied too much on one customer, so we increased our sales efforts to capture more customers and generate more sales.  We also created a new product that added brand new sales and reduced our reliance on one customer. Expanding can include increasing your geographic region, offering products in a new previously untapped market, or focusing on growing a specific segment.  As a result of our lost customer we also implemented a sales management tool that helped us focus more on where our sales were coming from, showed us how concentrated they were among our customer base and also helped us better forecast future sales. Growing and expanding your customer base can not only increase your sales, but also make you less reliant on one or even a few customers.

  • Innovate

I mentioned that we offered a new product, but it was already technology that we had in-house. Our innovation involved an effort by product management to get the technology ready for sale to complement our existing customer base. Creating a new product or even a new service that complements your current product or customer base is a way to grab a tighter hold and ward off competition. Another way to innovate is to find a new way to deliver your products or services.  We see that in the music industry with things like iTunes®. Amazon® revolutionized retail with its easy order and delivery model and locally I see it with restaurants grabbing sales by delivering food to the beach.  Another way to transform and innovate is how you engage customers to aid in obtaining feedback and improving your products and services.  Customers can provide a wealth of feedback that was very difficult and expensive to collect before social media and the internet.

  • Package

Packaging is another way to stand out from the crowd. Bundling your product or service with something else can set you apart from the competition. Packaging your products with a warranty, service contract or some other offer can help differentiate you. Cable companies and wireless carriers offer bundles at lower prices to capture more customers and make their product “sticky”, as customers rely on them for more and more services. Some restaurants have bundled too – think value meals and free refills.  Computers have been bundling software for years and airlines and hotels have also teamed up. Even my auto insurance company bundles a roadside assistance in with my policy, which allowed me to cancel my stand-alone roadside plan.

Keep Your Risk Low

It was almost 20 years ago that we lost that customer and I still remember it like it was yesterday. It was a  difficult time but we managed to bounce back and grow even larger. Business has many risks and one of those risks could be lost sales. Part of your business management plan should be to keep an eye the risk factors that exist in your business.  Listen to the market, the industry and don’t forget your customers too.  Take steps to manage your risks to keep your sales levels where you want them.