Who would have envisaged that in the space of a few weeks we would witness the locking down of entire countries, the banning of international travel and such volatile stock markets? These events highlight how interconnected we are and how fragile and vulnerable economies have become.
To be successful in today’s complicated world, business owners have to understand and manage these broader responsibilities. Owners have to expect that change will happen and happen quickly. While more businesses are preparing business continuity and disaster recovery plans, only the largest companies have the resources for regular crisis planning and scenario testing.
These risks come in myriad forms, can be internal or external, specific to an industry or business, and local or global in impact – refer below for some current examples. We call these Non-financial Risks as they are not purely financial, and generally do not emerge from the financial accounts of an SME.
How are SME’s currently handling these Risks?
Our alliance partner (Bstar) data research of 5,000 SME clients over a two year period has revealed.
- 61% of Business has a high to very high reliance on Owner’s.
- 51% of Business owners have not documented a Succession Plan.
- 33% of Business don’t analyse Growth Opportunities.
- 76% of SME’s are vulnerable due to limited cash reserves.
- 26% of SME’s are engaged in regular planning
At Davidsons we advocate a “Sounding Board Relationship” for not only financial assistance but to understand the Risk and Value Drivers in your Business.
For more information on understanding your Risk and Value Drivers and developing a plan to combat risk contact your Davidsons Business Advisory Team at ians@davidsons.com.au.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.