Posts Tagged ‘lowering risk’
Lowering the Potential Risks for Your Business
Thursday, March 20th, 2008
Understanding your business’ range of potential risks can help you to manage them, or even avoid them all together. By anticipating risks and potential pitfalls for both your business and the industry as a whole, you can protect your business and improve its success. Here’s how:
Step one: Identify the risks
There are two categories of risks facing companies: risks that directly affect the business and risks that face the business’ industry as a whole. For the former, make a list of potential risks that are affecting your business. It might include things like: specifically-named competition, price increases, material shortages, etc. Identifying the industry risks will take some research on your end. However, the good news is that most of it can be done online. The first place to start will be with the associations operating within your industry. From their websites, see if you can find any research on sales trends or social, economic or environmental issues that may have a direct effect on the industry. Second, do online searches relating to your industry and “risks”, “trends” or “research”. Third, take a look at the quarterly and annual reports for public companies operating within your industry. Many times these companies give a detailed report on risks and potential risks facing the company.
Step two: Rank the risks
Unless you make an effort to rank order the potential risks facing your business, you may very well fall into the trap of constantly putting out small fires and losing site of long-term goals. While all risks are potentially harmful to the business in one way or another, only certain ones demand immediate and undivided attention. Take the time before the risks appear to put them in order of most important to least important. This will require some time to think through the process of how the risk will affect the business and how disastrous the potential outcome could be.
Step three: Prepare an action plan
For each risk, set up a clear policy in order to manage and control it, should it directly affect your business. The policies should be specific, easy to understand and, ideally, quick to implement. The chaotic and stressful time when a business has fallen prey to one of its risks is never the time to create a how-to-bounce-back strategy. Take the time now to develop a process that is clearly thought through and will minimize negative effects.
So, while every business and every industry has potential risks looming, it’s what you can do to prevent or minimize them that will keep you ahead of the competition. An unknown risk is sure to affect an unaware business much more than a known risk to an alert business. Take the necessary steps now to put your business in the latter category. It doesn’t take much time or effort to prepare a risk prevention plan, but the detrimental effects it can avert can prove to be enormous.
Tags: business risks, Carrie Hinkel, Growing Your Business, lowering risk, management, protecting your business
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The Risks and Rewards of Exporting
Wednesday, January 2nd, 2008
Exporting can improve your small business in a number of ways. It can lead to additional sales revenue which may not have been possible in your domestic market. Going international can open up markets you did not have access to. It also can lead to increased profits, depending on the margins you are able to generate on your exported products.
Exporting does, however, have its risks and can leave you feeling out of control. There are a large number of variables that can impact your ability to export, many of which are beyond your control. So before committing your business to exporting your product or service, you must make certain you are aware of the positives as well as the negatives associated with exporting.
The Advantages
With increasing revenue you will need to buy larger amounts of products or raw materials from your suppliers. This will improve your negotiating power with your vendors/suppliers, enabling you to get better pricing. It is possible that you might qualify for discounts or better pricing per unit or you may be able to negotiate longer credit terms, meaning that you can keep potential borrowing to a minimum.
A new market means new customers who have not been exposed to all of your products. This is a great time to incorporate your vertical products and ancillary offering that compliment your main products or services. With a new market, the timing is ripe for you to move quickly and sell to your new customers.
Exporting can lead to increased sales which, if the costs are managed properly, can lead to a dramatic increase in profits. If your business has any seasonality to its sales patterns, an export market in your traditional “off season” can improve productivity, sales, and profits and can help even out the seasonal cycle you are stuck on.
When your business only has a few large clients, the loss of one of those clients can be particularly devastating to your business and the recovery from such a blow takes time. If you are diversified and have clients worldwide, you have improved your position against this type of a lost business or lost business volume scenario.
The Disadvantages
One of the biggest disadvantages of exporting for the small business is the increased exposure to risk. There are a variety of risks associated with exporting, just as there are risks in dealing with the domestic business climate. The risks include:
* Fluctuations in currencies can occur on a daily basis and effect both revenues and profits
* Shipping loss or damage to your products headed overseas
* Collection problems and slow paying accounts
* Delivery delays and customer service inquiries
* Language barrier when working through contracts, agreements, and other legal documents and solutions
* Ever changing market conditions
Language and cultural differences can also cause issues for your exporting business. Interpreters and cultural consultants cost money if you don’t hire a local contact in the country you are exporting to. Hiring a foreign national can cause a different set of complications you need to be ready to deal with.
While it is possible to outsource nearly every stage of delivery, this will cost money and further reduce profit margins. You may need more space to store and prepare products while you put an export order together. Additionally, if you are managing the new export offering, who will manage your current operations?
Exporting is an exciting expansion to a business that can bring tremendous financial rewards, but there is a risk associated with this potential reward. Consult and update your business plan and ensure you conduct an in depth risk-reward analysis before you move forward with your export plan.
Tags: Doing Business Internationally, exporting, International Market, International shipping, larry Slusser, lowering risk
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Get Smart and Don’t Get Taken: 5 Common Risks When Importing Goods
Thursday, December 20th, 2007
It’s easy to see why more and more business owners are showing an interest in importing, mainly from China. E-commerce is booming and all that competition means price wars, and importing goods in bulk allows companies to get big price breaks. Although, receiving those discounts means getting through the risks first.
As cynical as it may sound, the two biggest pieces of advice when importing are: trust no one and do your research! There have been too many horror stories of buyers losing money, getting fakes, damaged goods or never getting any shipment at all to think that something like that couldn’t happen to you. However, if you are smart and take all the necessary precautions, you can ensure that your importing experience goes smoothly.
Risks to Look Out For
Fraudulent company - Just because someone tells you their company is a “top exporter”, manufactures products of the “highest quality” and sells to big companies, doesn’t mean they are telling you the truth. However, having the internet on your side makes fact and reference checking easy. To avoid being taken by a less-than-trustworthy company, you should take the following steps:
1) Do a thorough search on Google using the company’s name,
2) Go to wholesaler forums and ask if anyone has dealt with the company,
3) If they claim to do business with a large company, then call that company and find out if it’s in fact true,
4) Talk to the U.S. Embassy in that country and see if they have any records on that company. For China, the website is: http:// www.buyusa.gov/china/en/ .
Unreliable goods - Unfortunately this happens quite a bit. You are shown pictures of products and assured that they are made from certain materials and of the highest quality, etc. Then, when they show up at your warehouse, they are not exactly the same. You may have ordered leather products, and they may instead be a different color or perhaps vinyl or PU (Polyurethane) leather instead of real cow leather. In addition to taking the precautions listed previously, you should also: 1) Request a sample, 2) Make it clear to the overseas company that you expect the exact same goods you were shown and list out the product specifications in writing 3) Have them take several pictures of the merchandise as it is being manufactured and packed, and then email them to you. Companies who have been in business a long time or who have a good reputation are less likely to try to pull this on new customers.
Branded goods that are actually fakes - If you feel like you are getting a “too good to be true” price on iPods or Sony Playstations, then they are probably fakes. No matter how much the overseas company assures you they are the real thing. Even if they show you a picture and you are convinced it’s real - don’t be. Many times they’ll just email a picture of the real product or a fake that looks just like the real thing. Recently, Consumer Reports magazine printed pictures of fakes next to real merchandise and it was hard to tell the difference - everything from New Balance sneakers to iPods. If your retail store tries to pass counterfeit merchandise off as real, both you and your company will be in big trouble - it’s a federal crime! Learn how to tell the difference by checking out our 10 Golden Rules for spotting fake products .
Longer than expected lead times - Overseas companies are notorious for their long production and shipping times. If they tell you 30 days, expect it in 60 days. As long as you expect there will be delays, you’ll never be disappointed with a ship date that keeps getting extended.
Unexpected charges - Many buyers new to importing don’t realize that most of the prices given are FOB Hong Kong - meaning that the shipping charges to your warehouse are not included. There’s also customs fees, import taxes, etc. Do your research and figure out your actual cost of importing before you have placed your order with the factory or manufacturer. Otherwise, you will be in for a huge price shock!
As long as you take the time to do your own research (and plenty of it) you can avoid all of these risks. The problem most first-time importers have is believing everything they are told by overseas companies and not checking the statements for themselves. Now that you’re “in the know”, it’s doubtful you’ll fall prey to any importing scheme!
Tags: Carrie Hinkel, china, Doing Business Internationally, importing products, lowering risk, tips
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