Business Risk
05/03/2010
Dealer £35k GP after 2 months equals £210k annualised. Stock value £300k so ROI 70% (below benchmark)
There are numerous risks for all businesses; in fact, there is no business if there isn't risk.
No-one could have foreseen the unprecedented trading conditions experienced recently. Damage to reputation acquired over the long term, financial losses and business failure can be sustained in a relatively short period of time, prompting risk managers and Boards to reassess their risk analysis, exposure and attitudes, whilst asking some difficult questions.
Increasingly, external Financiers and manufacturers are also reviewing their exposure and assessing their risk of bad debt both within networks and externally, which in turn makes adherence to financial covenants for dealers of up most importance.
Many economic commentators warn of a ‘double dip' recession with consumer spending and confidence low, real household incomes stagnant or in decline due to possible rising unemployment, and little more benefit that may be gained from further quantative easing. A small hike in interest rates may have a further damaging effect.
Risks other than Financial require some consideration also:
Business continuity
Risks mainly associated with business interruption.
Have you processes in place to allow you to recover quickly enough to maintain reputation and brand image?
Environmental
Have you the necessary waste disposal processes and chemical / fuel licences? Increasingly customers and investors have high expectations of how companies act, and these considerations should be part of longer term strategy.
Data, Security and Privacy
Reputation is built on trust. Allowing sensitive personal data to fall into the wrong hands can irrevocably damage trust, as some larger government departments have found recently. Risk is may be increased with email and internet usage. Have you robust security systems? Are your staff trained appropriately?
Fraud and Ethical Risks
Personal dishonesty, a lack of integrity - if you discover them, you have systems available at your disposal, however these need to be applied in a pre-perscribed order. Simplistically, have you employee contracts in place? However health and safety and compliance violations may be more difficult to determine. Get them wrong, however, and the impact on your business, your people and reputation can be disastrous.
We can assist with reviews of financial strategies and plans either network-wide or for individual groups or dealers.