How To Cut Business Risks Outside Of Your Control

Pexels - CC0 License

While it might seem as though larger, international firms have to weigh up much more risk than smaller firms, smaller firms tend to bear the brunt of problems or unexpected issues more intensively, sometimes spelling out the end of their business.

Something as simple as a supplier not providing all of the previously agreed-upon or paid-for inventory can lead to a trading period of chaos as deadlines need to change and new suppliers need to be found. Every executive chef knows and fears this problem, for example.

As a small business owner, learning to cut business risks outside of your control sounds like an oxymoron. No business is an island, of course, but it’s hard to dictate terms to others that you have no real control over. As we’ve seen of the supply chain post-Covid, systems are incredibly sensitive and difficult to navigate from time to time.

That said, we do have a chance to determine who we work with and assess our risk of taking on new suppliers or partners, as well as weighing up potential responses should a problem arise. In this post, we’ll discuss a few techniques to help you limit that outside risk:

Consider Bonds

Bonds that guarantee results will be achieved, such as via contract bonds can be a good idea. This means that a payment and performance bond will ensure those you hire or commission will be beholden to actually perform the work you’ve paid for, or ensure the payment process takes place seamlessly. That in itself can be tremendously worthwhile for all involved in the process.

Vet Suppliers

It’s important to vet suppliers to the degree that you can. This involves looking into their history and practices, making sure you know where they source certain goods, as well as verifying they’re part of the initiatives they claim to be part of. For instance, if a food supplier claims that all of their goods are organic or part of the fairtrade farming network, then it’s important to vet that properly and confirm it. Ultimately, we’re responsible for those we choose to deal with, and that means taking the initiative to ensure everything is above board.

Define Clear Terms

It’s important to be thoroughly clear about your terms via all communications you have, both internally and externally. Make sure to stipulate all of the policies that need to be abided by in your employment contracts. If agreeing to supply a company with products, make sure that all of your logistics and insurance considerations are agreed upon before doing so. Itemize these needs, make sure legal entities read over these terms, and always make note to explain or draw attention to them no matter what. Otherwise, vague issues can sometimes mean that problems do not get resolved in your favor, or at the very worst, you might be accused of never accommodating their possibility.

With this advice, we hope you can continue to cut business risks outside of your control in the most promising manner.