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Does Your Business Plan Take Into Account The Risks Involved?

If you’re looking to strike out on your own and start a business, there are multiple risks that you need to be aware of so that you can mitigate them as best as possible. Understanding the risks and optimising your response to managing them are vital skills for entrepreneurs such as yourself to build up your knowledge.

Identifying how you and your business could be at risk can help prepare plans on how you can deal with them, should they occur.

It’s a critical aspect of business planning that you can also apply on a yearly basis, to address the potential risks and hazards that may occur that particular year while also reassessing your previously perceived risks.

The risks that you need to be most aware of are the risk of bankruptcy, financial risk, competitive risks, environmental risks, reputational risks, and political and economic risks. The constantly evolving changes to technology and the rapid digital redundancy from the constant changeovers in devices are other risks that your business may need to account for.

Financial Risk

Any new business should have a financial plan within the overall business plan showing income projections, how much cash will be required to break even, and the expected return for investors in the first five-year timeframe. Failure to accurately plan could mean that the entrepreneur risks bankruptcy, and investors get nothing.

Strategic Risk

By living in a dynamic and fast-paced world, business strategies can quickly become outdated and no longer be as practical or relevant when it comes to your business’s market. This can lead to struggles in reaching benchmarks for your business and key performance indicators (KPIs).

Technology Risk

To be competitive in a world where new technologies are constantly emerging, businesses like yours will need to adapt to these new systems and processes.

Competitive Risk

You need to be aware of your competition within your market. If the market is too saturated, it can be difficult for you to break through and compete on an even playing field. You will also need to ensure that your intellectual property is protected from your competitors by seeking patents to prevent them from stealing your products.

Reputational Risk

In the initial stages of your business, your reputation will be worth more to you than gold. If you fail to live up to customer expectations in the initial stages of launching your business, you may not gain the necessary traction that you need in the market. You can manage this with a strategy that communicates product information and builds relationships with consumers and other stakeholders.

Strategising for dealing with the outcomes of the risks that may eventuate for your business in your business’s plan is an effective way to show investors that you are accounting for any potential trip-ups. It’s also an effective means of evaluating your business’s performance as it progresses, as risk assessment is an ever-evolving process.

We can assist you in planning for any eventualities that you might encounter during your business’s start-up process, so speak with us.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

Testimonial

What our Client Say

John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier

David and Alison Parker

I have been consulting J L Noller and Co. (more specifically Jane) for six years and during this time I have found her to be professional, efficient and easy to discuss all accounting and taxation matters with. Her office team are all polite and friendly also.

David and Alison Parker

Business Owner

Carl Gillmore

I have used Jane & the team for the last 6 years for all of my business & personal accounting needs. They have always been professional, easy to talk to & available when we have needed assistance.

Carl Gillmore

Carl Gillmore Landscape

John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier