Steve Davies Online

But downturns can also be caused by such diverse elements as a market crash, a terrorist attack, a natural disaster (such as Hurricane Katrina), an epidemic on another continent (such as SARS or the avian flu) or by one of a thousand other things.   Predicting these kind of things is virtually impossible. Lehman Brothers recently appointed a high-ranking ex-CIA official to give them information on events worldwide that could have an economic impact. That may or may not work for them, but it is way beyond the reach of small business owners with limited resources.  

One of the problems that confront small business owners is that they wear all of the hats - CEO, manager and chief employee. The latter takes up virtually all their time and they get caught up in the “Tyranny of the Urgent” and are simply too busy to think about strategic issues. As a result, proactive planning is a luxury.  

Your business is probably your most valuable asset. Businesses don’t plan to fail – just fail to plan and all your hard work can be wiped out by something that you think is outside your control. Control is an illusion anyway. Markets, suppliers, customers and, particularly, employees ultimately cannot be controlled and carry inherent risk factors that will always elude you.  

The answer is to take a different approach that involves planning proactively to predict and prevent the factors that can derail the business. It involves putting in place a plan that few people even consider - a “Risk Avoidance Plan” that looks at all the areas of possible exposure and identifies strategies that can be used to protect against the bad things that can happen.  

Almost no small business has one and yet it is surprisingly easy to create by following some basic principles to identify where the vulnerabilities lie and what can derail the owner’s plans, hopes and dreams:     

• It starts with putting in place solid prediction systems that will provide you with an early warning of problems.  
• It then requires going through a risk analysis profile that identifies all of the potential areas in your business that make it susceptible to a downturn in any of your different business units.  
• Some of the areas identified are capable of being reduced and some are not. It is surprising how many can be at least de-emphasized when you really start thinking about them. The final and most important piece is developing a risk avoidance plan that will identify strategies for those areas that you can mitigate