During this time of global recession, survival is front and center on the minds of business owners and operators. Survival involves strategies for both growing the business to maximize profit and managing risk to minimize losses. The challenge of knowing when to pull back and when to move forward is enormous for today’s entrepreneurs.
Many small businesses fail because they do not adequately manage their risks and control their losses. Some losses are easier to see and control than others. Lack of quality control causes losses, as does a decrease in productivity. Worker injuries, with the resulting increase in workers’ compensation costs, are a big drain on a company’s resources. Many entrepreneurs fail to recognize the indirect costs of injuries. These expenses include replacing injured workers (either temporarily or permanently), human resource time for medical management, and negative publicity, among others. Indirect costs of worker injuries run four times the direct medical costs.
Chronic diseases among workers, whether or not they are work-related, are another expensive loss to businesses. Chronic illness leads to higher medical costs, increased absenteeism, decreased productivity, and greater turnover. Chronic diseases, which are largely predictable, increase employer healthcare costs by 25 per cent. They are the largest cause of lost work time among workers from age 15 to 69. They are also preventable through increased health awareness and changes in lifestyle.
While costs for occupational safety and health programs and wellness initiatives may seem prohibitive in these tough economic times, they may make be sound business investments. Studies show an average return on investment of three to one for workplace wellness programs. For most businesses, helping employees improve their health provides an opportunity for savings. It may be the only way to keep medical costs down. Instituting effective safety and wellness programs can be sound profit strategies.
Outsourcing is another money-saving business strategy. Nearly two-thirds of U.S. technology firms plan to outsource in 2009. Companies typically outsource business support services, like customer service, mail service, and payroll. Some outsource manufacturing and professional services such as writing, marketing, or accounting. Careful outsourcing saves money by allowing business owners and managers to focus on core business functions.
Advertising can be essential for business survival, yet the advertising budget is among the first to be reduced. Whether to ramp up or scale down advertising in tight times is a difficult business decision. It can be hard to know if advertising is a strategy for success or a waste of limited resources.
Running a profitable small business is complex, involving many factors and variables. It’s hard for the entrepreneur to know what steps to take to avoid failure and maximize profit. Business people who are starting new businesses or working to help their businesses survive have many resources. Government agencies, non-profit organizations, and other business provide information and services to help businesses grow and survive. In many communities retired business professionals mentor new entrepreneurs, usually as volunteers. Other free or low-cost assistance includes guidebooks, counseling, checklists, ebooks and other online resources, and legal information.
Business survival involves risk-taking and informed decision-making. Now more than ever entrepreneurs benefit from careful strategies for expansion and loss control.
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Chris Robertson is a published author of Majon
International. All Rights Reserved. Copyright 2009 (Tue Apr 07 2009)
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