There are many issues facing any SME business and your aim should be to avoid disputes and legal wranglings by identifying some common risks. Any enterprise involves a certain amount of risk taking, but by adopting a balanced approach and trying to identify potential problems your business may face, many of these can be avoided. This strategy is known as risk management.
Some common issues faced by small businesses are:
- Increased cost of raw materials
- New competition
- Changes in tax, inflation and borrowing charges
- Damage to your business by fire or flood
- Theft – burglary, shoplifting, embezzlement by employees.
Make time to do an assessment and look systematically at all the risks you can identify. List these threats in a risk register – this could be included in your business plan and prioritise the risks that would cause most damage to your business. Management is an on-going process and by keeping your register up to date and adding new threats as they are identified it will be easier to take steps to mitigate them.
Matthew Fretten, Commercial Partner, explains that terms and conditions (or terms of business) are crucial elements of risk management. He says “Clients / customers are the most important part of your business and you certainly want to avoid the risk of getting into a dispute with them. Terms of business are essential here. These will set out the agreed terms between you and your customers and cover key areas such as payment terms and limits on your liability.”
Matthew continues “Your suppliers will have their own terms of business and these should be studied carefully before you sign them. If there are clauses in them which cause you concern take advice before signing. If your business needs to supply items to customers by a certain time you do not want to be let down by your supplier and then find you have no legal recourse against them.”
If you would like to talk to our experienced Commercial Team please call 01202 499255. We offer a free initial appointment and also a free review of your terms of business to highlight any areas of concern and possible risk.