What smart businessmen do

1.  Have a strategic plan that includes risk assessment

This needs to be in place when starting the business. What equipment and assets will you require to achieve the objectives towards your dream? Resources will be required – financial resources, human capital and certain assets depending on the kind of business you are in. When you set up your business, there are certain risks involved with all these aspects, because you will have contractual relationships with the stakeholders – be it employees, the people you are supplying or your suppliers. Map them and find out what legal obligations you have to them, to make sure you fulfill them and avoid financial loss.

2.  Insure your business

Certain events can happen suddenly and may put you out of business forever. If the assets you have bought for the business got damaged in any way, you would suffer financial loss, which may affect your progression in business. However, if you incur loss, you can be paid for your machines, your capital and the income you have lost. To prevent this, get an insurance broker to assist you in understanding the ways in which you can protect your business. Let them understand your strategic plan so as to know what types of policies you require according to your business and according to the law. Every time you take loans to fund your business, insure the loan.

3. Keep accurate records and back them up

Keep good records, for example in terms of stock, asset management, staff files with references in them, photographs and identity card numbers. Do proper stock management and properly maintain your books of account. If you needed to make a claim after a fire or theft, and records are there, the claim can be settled very quickly. Keep your records properly, outside the business. In this era of technology, it is easy to back them up elsewhere. You will be able to continue your business even when the physical business goes up in flames, since you already have a relationship with the suppliers and the customers are there. When they call you for orders, you just get the orders directly and deliver. Your return to work is fast tracked. With good records, you will also know for sure if your staff are stealing from you.

4.  Keep your ears to the ground and read a lot

The risks that are going to affect you are not only within your company, and not only within your industry. There are other external factors that may affect you. For example, if there are political changes or issues, how will they impact on your business? If there are regulatory and legal changes, whether in your industry or in the country setup, or global, how will they affect you? For example, the issues between the US and China may seem too far off, but they are our trading partners. Some of the tariffs that will be placed will affect us. If the interest rates go up in the US, the dollar will be affected and it may affect your business. Geopolitics is important to your business. Who is aligned to who? Would your business be touched in any way by politics? You might find that you need to take something like terrorism cover because of the people associated with the location you are in.

5.  Protect your data

Because of technological innovation, we are highly connected. Does your business rely a lot on technology? Your data can be corrupted and affect your business. Ensure that you have employed enough security measures to prevent cyber theft.

6. Recruitment

Get two to three references for anyone you are employing. Do background checks, which ensure that the person was not a crook wherever they were and you know their background, so that they do not destroy your business, affect its continuity or affect your branding. You also do not want people who will over promise and under deliver, because it will reflect badly on your business.

7.  Read the fine print

If you decide to take insurance, there are things written in small print, such as the warranty and scope of cover. For instance, you can decide to get a fire policy or no risk cover but find that it does not cover you because your kind of business uses hazardous goods or flammable items. The normal standard fire policies will exclude certain things, yet you may be in a business where those exclusions are. Sit down with an expert who will tell you what exclusions there are and what to do about it in order to be insured properly and at a fair cost. You need to know how the warranties affect your business. If your business involves a lot of money, how do you transfer your money from the premises to the bank? If you are not careful, you might find a transit warranty put in your policy which states that you cannot carry more than Sh200,000 without an escort or security company, yet nowadays people keep such amounts of money in their pockets and move around.

8.  Have a proper business structure

Even if it is a small business, your dream will be executed by other people. Be clear on who does what in your business. As your business grows, the structure also grows and that means there may be some operational risks. Supervision will be required for people in your business. Have audit systems within your business and do regular audits. Have good supervision, make sure your employees are well-trained in what they are doing, understand their roles properly, and they are employed according to their strengths. Find out what would happen if certain people got sick or were absent for whatever reason. What would be the impact on your business? You can get compensation from insurance for that to enable you recruit other people.

9.  Have good risk-mitigation systems

Operate as if you are not insured, because the main aim is to progress in a certain direction of value-creation to the customers and to the people you have employed. Whatever you can do without using money or additional expenditure, do it. This is such as ensuring your structures are well-done, the feedback system is good and customers are satisfied. This is because when your brand name is affected, your business is affected. Business continuity will be affected, because even if insurance pays you for loss, your customers already left and went to the competition.