Contingency Plans
In any business there are risks. While the primary aims of anyone in business are to make money and provide a quality product or service, it is important for managers to also consider carefully the potential problems their business might cause for the businesses owners, staff, customers, and the public at large. Having an airtight contingency plan, setting up good legal and insurance protection, and getting reputable financial advice are essential parts of a manager’s role.
As shown by the recent oil spill disaster in the Gulf of Mexico and the flood of BP claims that followed – not from BP customers, but from everyday citizens – there are some risks in business that can be catastrophic. Most businesses aren’t nearly big enough to potentially cause this kind of problem, but there are a lot of risks that are much closer to home that happen every day including employee injuries, customer complaints, and economic fluctuations.
In my own business I was very careful to make sure that I had a number of systems in place to protect myself, my employees, my customers, and my community from my business in case things went wrong. In my everyday business I have documented systems and regularly provide training and instruction in following these systems. But primarily my concerns were that I had good legal, actuarial, and financial advice and plans in place, before I started my first day of trading.
Legal and Actuarial Protection
Legal protection is essential for every form of business. Without a solid business structure, properly drafted legal documents, and adequate insurance you could be at great risk personally and financially. A good lawyer will analyze your business and recommend the proper protection. In particular, well drafted contracts and an appropriate business structure will help protect you from litigation and enable you to enforce agreements. Also, the proper level of insurance that covers your business activities and income will mean that you can get a good night’s sleep after leaving the office.
Reputable Financial Advice
Because of the nature of business it is essential you have a good accountant at the very least. Your financial advisers must understand the reporting requirements of your business and your taxation obligations. Get this wrong and you could face considerable fines and penalties. The BP claim fund is an example of what is possible with proper financial advice. You probably won’t need to be able to set aside $20 billion, but having adequate reserves will enable your business to ride out the ups and downs of economic cycles and provide a good return to investors and other stakeholders.
When you fly on a commercial airline you probably try not to think of the possibility of things going wrong. However, if you do, knowing there is a life jacket under your seat and a gas mask above you is reassuring. It’s the same in any endeavor including managing a business. Aim for profits and growth, but know you have a net beneath you if things don’t go as planned. Formulating a solid business contingency plan will give you peace of mind and help you do your job the way it’s meant to be done.