Protect your business from disaster


Shortly after college I temped in the customer service office of a business in Philadelphia, and one of the other agents was a sweet down to earth woman from South Philly who would sometimes say “Cover your butt or have none!”  It stuck with me after decades, so much so that I almost used it as the title for this post.  But I value decorum too, so we’ll go with “protecting your business from disaster” instead!

My old coworker had a point: we must take measures to protect ourselves and our businesses.  As a bicyclist who has been through a significant accident I can tell you that it takes very little time for disaster to strike, and the time to prepare for it is before it happens.  You probably won’t have time once that figurative boulder is rolling down the hill towards you.

But I think it is important to think briefly about the last part of my friend’s adage too: “…or have none!”  I suspect that we all have a sense that we need to protect ourselves.  What I feel I sometimes forget is that the stakes can be very high—even the business itself might be on the line with one damaging incident.

Then, like the Boy Scouts motto says, how can we “be prepared?”  I go through the steps to plan and prepare for potential catastrophes our businesses might encounter as we go through our entrepreneurial journeys together in this next video.

Can we stop every disaster?  Of course not.  But there are simple, effective, and prudent actions we can take today to minimize risk and damage.

In this video I talk about identifying risks in our businesses and what steps we can take so that we are protected as much as possible.

I also have a downloadable ideas guide, just like the one I use in the video, to help you protect your business.  Fill in the request form below the video and I’ll send you the download link to get it.

Bonus! We’ve got a snazzy infographic to go with this post!
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Welcome to another finance video from Your Money and Your  Today’s topic is very special to me, for two reasons.  The first reason is that it’s a topic that’s not talked about very often in small business but really, really important and secondly, it’s about making sure that we don’t lose the business

All it could take is for one bad incident to ruin a company; an injury of an employee, an injury of a customer, something that damages the company’s reputation, an error or omission.  Any of these things could ruin a company very quickly through loss of money through lawsuit and if we’re not careful ourselves, we could lose ours to one of these things. 

So what has happened over the years is I’ve worked with clients is that I’ve developed a framework that we have for dealing with risk, a framework where we work through to identify what the risks are and reduce the potential loss.  It’s pretty basic but really, really important and it goes like this:

First we identify what the risk scenarios are and we score them.  What we do is we just go down the list and say, “Where are there areas in the business where we could have risks?”  And then, “How likely are these risks going to happen and what are the potential damages that could happen as a result of these risks?”

So for example, I’ve come up with what a risk profile would look like for a restaurant and here I have a list of the risks; food contamination, fire, cuts, register theft, slip and fall in the restaurant.  For purposes of discussion, if it’s a large enough restaurant we could break it down by business area — not important, but up to you. 

Then we have the likelihood score.  How likely is it that we’re going to have food contamination?  How likely is it that we’re going to have a fire?  How likely is it that someone’s going to cut themselves in the course of cooking?  Register theft, slip and fall in the restaurant.

Then what are the potential damages?  Food contamination – probably low likelihood because of the quality of food regulation and safety these days, but if someone gets sick from food poisoning it could send them to the emergency room.  Fire – huge potential damage there, low likelihood but huge potential for damages.  Cuts – probably people nick themselves all the time and that’s it.  Register theft and slip and fall. 

So all of these things have likelihood scores and damages scores, and then what we do is the total score are the two multiplied.  So ‘likelihood x the potential damage’.  So this is just a sample. 

I developed this methodology after I worked with my last restaurant, and it’s been a few years since I worked with restaurants.  So if you’re a restaurateur you might think differently.  Please forgive me for that!  But the principles are the same: that we want to identify the risks, then we want to know the likelihood and we want to know what the potential damages are.  So that’s the first step. 

Then the second step is that we address each of these areas of risk—food contamination, fire, cuts, register thefts, slip and fall in the restaurant.  We address each of these by asking a series of questions.  The first question is, “How do we prevent it from happening in the first place?”  We don’t even want to get started.  We don’t want to go down that road of having the problem in first place.  So how can we prevent this problem from occurring? 

Then we ask ourselves, “Well if it still happens, what are we going to do during the event to reduce damages?”  So let’s say that there is a slip and fall: someone slips in the restaurant and they break their arm.  What are we going to do at the time that that happens, to make sure that we mitigate, that we reduce the damages?  You know, we aren’t going to tell someone, “Look, get up right away.”  We’re going to call a medical professional.  We’re going to call the ambulance.  We’re going to know first aid and help that individual. 

Then the next question that we ask—so we mitigate, then we figure out what the post event recovery will look like.  How are we going to take care of this patron?  What are we going to do to make sure that we communicate to the public that if the word gets out, what we’ve done to help this customer?  You know, look as good as possible in the process and really to be concerned, genuinely, about their care, for example. 

Then the fourth question is, “How are we going to insure against this event?”  So going back to our restaurant, I’ve talked about broken bone, but what a risk plan looks like for a kitchen fire actually is in this document right here.  So we put in the title, ‘Risk Plan – Kitchen Fire’.  Then here are the areas:

Prevention—What are we going to do to prevent the fire?  We’re going to keep flammables away from the stove.  We’re going to tie aprons and sleeves to avoid having loose clothing near flames.  We’re going to call the insurance company and ask them to walk through it with us, to make sure that we’re following good procedures. 

Then what are we going to do to mitigate?  We have a sprinkler system in place.  We check it monthly to make sure that the water flow is good.  We have fire extinguishers at all the exits, with pull alarms.  These are all mitigation steps. 

What are we going to do to recover from this?  And then finally, what insurance do we need to have in place against damages from fire? 

That is the whole system, the whole protocol that we work through.  Now, I realize that we have small businesses to run.  There are urgent things that crowd out the important, but I highly recommend talking the time to do this, to really invest some time up front.  It’s a project that once you’re finished with it, is something that you just need to review annually to make sure that your risk profiles are still consistent.  So you know, make sure that you still have all of the same risks that you had initially done and see if there’s anything new, anything you can cross out, score them and then come up with risk plans. 

To make it efficient, I suggest that first what you do is set aside a couple of hours with your team, do a draft of the framework, list out all of the risks, score them and then explain to them the next step, “Hey gang, you know we’re going to fill out these documents to make sure that we prevent, mitigate and recover and that we’re insured okay.” 

If you’re solo or really small, like me, then you can do it yourself.  Typically what I do is when I go out to eat is I bring my work with me and then I start to take notes.  In a few hours you could probably get through this.  But regardless of how you approach it, I think that what you’ll find is a great deal of satisfaction completing it and more importantly, comfort in knowing that you’ve protected your business. 

I will make these templates available to you for download.  So look at the download link below, click on it and you can get these documents for free, just to give you a head start on protecting your business. 

And with that, I thank you for watching.  Be sure to connect with me on LinkedIn or Facebook and I look forward to seeing you in the next video. 

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