26 Apr Some Business Decisions That Can Quickly Turn Into Business Risks
Sometimes, it’s important to take business risks as that can help in business growth. However, there are some perfectly reasonable and normal decisions that can have a negative impact or even shut down your company. There are times when even large corporations take questionable business risks which find them struggling with poor sales and eventually lead them to declare bankruptcy.
Risks that can have a negative impact
Some of the decisions or risks that can upset a well-established company are pretty obvious such as:
- Taking on excessive debt can bankrupt a business
- Inadequate training for employees is another obvious risk
- Not checking contract worker backgrounds or the references of people you hire
But there are times when a company takes on strategies that don’t appear to be risky, and they still find themselves on the path of a potential dead end. Let’s take a look at some of these poor business decisions that can quickly turn into business risks:
#1 Accepting a very large client or project
It’s obvious that you want to expand your business and increase profitability. That is also one of the reasons why many businesses take on clients that are too big. It may not seem like a risk at that point of time because the payoff may be excellent. A big client and larger projects can rapidly increase revenue and profitability, but the risk is considerably higher as well.
When you take up a larger client and don’t have the resources and capability to handle any more work, you slowly start to wean away other smaller clients and this can be a big mistake. If things don’t work out as they expected and you lose that big client that can take you from comfortable to straight to out of business.
Even if very tempting, big opportunities come along, you need to assess whether your company has the capacity to handle them without affecting existing projects and clients. Take up a diverse range of project from several medium-sized customers, so you will have a steady revenue stream coming in from various avenues.
#2 Not planning an exit strategy
Most business owners feel that if they focus on more positive things, work hard and take smart business decisions, success will surely be theirs. If your company is doing very well, why would you even think about a strategy to shut it down? The fact is that you need to have an “executable exit strategy” that you can follow if you want to sell your company someday, want to retire or need to fold your company due to some reason.
Most business owners become so involved in the day-to-day running of their business that they don’t take the time to plan an exit strategy. A sound exit strategy is the one way to have your bases covered in case something changes or doesn’t work out as you thought it would, in the future.
#3 A new product launch
When it comes to taking business risks, introducing a new product doesn’t really sound like a risk. Rather, it seems like a smart thing to do in relation to expanding a business. While it actually can be a smart decision, it can sometimes also blow up in your face.
A new product launch can be extremely time-consuming and expensive and requires a considerable amount of resources. It’s important to keep in view that without risks, there can be no gain. But, you need to ensure your decisions are well-thought-out and calculated, or else a big new product launch will only be a thorough waste of money.
Reducing risks is one way of improving cost-efficiency and keeping your business on track. For effective and sustainable cost reductions & efficiencies that will increase your bottom line, contact the experts at Benchmark Cost Solutions at this number – 1300 170 585. If you prefer, you can also request a call back or write to us at this email address.
Thanks for reading,
Benchmark Cost Solutions Team
1300 170 585