Pursuing development opportunities while there’s a strong demand for your company’s products or services will position you for long-term growth. While an increase in your sales volume may have you feeling pretty confident about where you’re heading, it’s important to forge ahead with caution. Transitional periods when companies are working on ramping up their operations can present some unforeseen challenges, and doing more business means taking on more risk. Here are five things that you need to prioritize in your risk management strategy as you achieve growth.
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Toggle1. Cybersecurity
There are a number of things happening during development that could put your data and your customers’ data in jeopardy. Doing more transactions with customers online, for example, may increase the possibility that a third party could intercept your customers’ information. Likewise, bringing more staff onboard can create more vulnerabilities. To mitigate the risk of human error putting data in harm’s way, be sure to include cybersecurity training in your onboarding procedures. In addition, a comprehensive user access review can alert you to potential problems with the extent of individual employees’ ability to view data. It will also let you know if users have more authorization than they should have to edit data or change network settings.
2. Employment Practices Liability
If you’re hiring additional staff to drive expansion initiatives, it’s advisable to review your current human resources management policies and procedures. Ensure that your procedures are consistent with your policies. Deviating from your own internal policies in any way could give rise to employment-related liability claims. Furthermore, you must ensure consistency with any applicable federal and state regulations involving key areas of employment law such as anti-discrimination protections for workers and the categorization of employees as full-time staff or independent contractors.
3. Expense Management
As you put more of earnings back into the business by purchasing value-adding fixed assets or enhancing your marketing campaigns, it’s surprisingly easy to overdo it. Increasing your operating budget while also contending with some unpredictability in your sales volume could make it difficult to gauge your spending power accurately. Nevertheless, it is imperative that you take care to avoid overextending yourself financially.
Rein in spending by identifying individual line items in your operating budget that may have room for savings. Before you make any substantial purchases or commit yourself contractually with service providers, shop competitively. If you’ll be using financing for any significant expenditures, survey the marketplace thoroughly. Don’t accept the first financing offer that you see simply because you deem it to be reasonable. During an upward trend in your earnings, financiers should be willing to offer you competitive rates to earn your business.
4. Credit Building
Incurring higher operational expenses may entail drawing more from your available credit or entering into a long-term repayment obligation for a business loan.Be conscientious about the effect on your company’s creditworthiness. A lower business credit score could impede your access to financing opportunities in the future or subject you to higher interest rates. Overutilizing your available credit could also undermine your efforts to build up credit.
Keep a close watch on your score so you can monitor the effects that your spending activity and the way that you’re paying down outstanding debt is having on it. A monitoring service that automatically generates notifications when there is a change in your score could help you stay on top of your credit-building goals.
5. Collateralizing Assets
Collateralizing assets to procure capital may be a necessary risk, but you have to go about it conservatively. Avoid encumbering assets that you depend on in your day-to-day activities, and refrain from giving creditors secured interests in them unless you have a strong degree of certainty about your ability to make timely payments.
Ultimately, good oversight and organization can help you mitigate risk during expansion. Take a proactive approach to preventing problems, but also put contingencies in place with commercial insurance elections. Taking the right steps to protect your business is going to enable you to win confidence from financiers and other potential stakeholders who can help you continue building your business.
