Business risk for smaller operators or startups is found in many forms. It is often created when a startup actively looks for business premises to work from, for example.
All too frequently, suitable workspaces are sought which will only fit the business plan as it currently stands. The trouble with this approach is that the best-laid plans of SMEs tend to change in the short and medium term. Sometimes, the business grows much more rapidly than expected. During these early stages, your business model needs to be flexible and adjust accordingly.
Fortunately, Flexspace offers two types of contract, a shorter licence for flexibility and a longer lease for those who want more certainty in their planning.
Below, we take a look at various risks to your business, including your overhead or business premises risk.
The cost of business premises is one of the more significant but inescapable overheads that a small business will face. You should focus on it to reduce this risk to your long-term financial health as much as possible. Aim to sign a contract for a premises which suits your business today and tomorrow. Flexspace are experts at recommending what type of contract will be best for your business. You should be looking for a space that suits your current requirements, yet have the flexibility to change if needed.
If you need to upscale later, then ensure you are not tied down to a longer-term arrangement than you need. Again, Flexspace provides the sort of flexible agreements which offer shorter arrangements that can change as your business needs evolve. Essentially, flexible agreements remove the threat of several risks but – most importantly – those that come from excessive overheads.
Obtaining the right staff is key to many small business managers who rely on a dedicated team of employees. Always take your time to obtain the best people that you can.
Don’t offer a job to a candidate you are not fully certain about. Re-advertise, if necessary. Keep newcomers on a temporary contractual arrangement until you are sure they fit the bill. Removing permanent members of staff from your employment who do not work out can be costly, stressful and time-consuming.
Nearly all startup businesses operate with a certain level of debt that they need to service. Few SMEs get up and running without borrowing to some degree, in order to handle their inevitable startup costs.
Borrow from a respectable lender who understands the business plan and who can see the longer-term vision of what you are trying to achieve. In addition, it is wise to ensure loan repayments, local business tax and rent are the priority over other business debts, such as supplier invoices. Of course, flexibility from your landlord will allow you to reduce your exposure to longer-term business debt, as previously mentioned.
Should you fall behind with any repayments that are due, then it is better to be upfront. Inform creditors of any short-term cash flow problems you may be experiencing. Work out a payment arrangement with creditors from the outset in order to catch up. This is certainly much better than waiting until they lose patience and call the debt in via the courts. Such action can damage your reputation as well as your bank balance.
Some SMEs will face particular business risks that only relate to their sector, such as companies who have seasonal workloads. However, all smaller businesses face risk from debt, overhead management and staffing. Get it right in your handling of these three and your business will succeed. Conversely, if you don’t keep your eye on the ball, then you could be placing your enterprise at a greater risk than it ought to face.
Flexspace pride themselves at helping SMEs flourish. Why don’t you get in touch on 0800 033 4444 and see what flexible deal they could offer you.
With 59 sites across the UK, there’s bound to be one that fits the bill.