Use risk to sell and coach

Working with growing SMEs will make you aware of how fragile some businesses are.  Of course, businesses of any size can be caught out by unpredictable events but small businesses are often hit by things that were entirely predictable - and the consequences can be fatal.

In the corporate world they have formal risk management processes and reviews.  Smaller businesses don’t run to those but a simple checklist approach can be applied on a regular basis.  This won’t in itself remove risks but it will bring them to the attention of your client who can decide what action to take, if any, to remove or mitigate the risk.

This approach is also a great way to demonstrate value both before and after you have signed a client up.

Explain to your proospect or client that risk in a small business can be considered in six areas:  Revenue, profit, cash, people, reputation and regulation.

  • Revenue risks include over-reliance on a single customer and limited track record in bringing in new business.
  • Profit risks include inadequate project control and tracking and failure to review and discuss overall margin trends regularly.
  • Cash risks include inadequate terms of business and rapid growth of typical project size.
  • People risks include missing restrictive covenants in the employment contracts of key people.
  • Reputation risks now come primarily from online postings, although word of mouth still plays a critical role in broadcasting service failure.
  • Regulation risks include health and safety failures and compliance failures.

Risks in each of these areas have the potential to seriously damage a business, perhaps terminally.  The good news is that it is an easy win for you and your client to put in place a risk checklist to identify the risks in their business.  You and your client can then devise short, medium and long-term plans to deal with the risks identified.

If you'd like to get hold of a risk checklist template and other great business coaching tools then head over to this website.

Adapted from an original post on my coaching website www.nickbettes.co.uk

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