A. It’s a new year with new challenges, but there are many lessons from 2013 that you can use to ensure 2014 is a better, more productive year.
It’s also an excellent way to evaluate and approach challenges.
Here are eight questions to get your creative and strategic juices flowing.
1. What were the breakthroughs?
Hopefully you had a few: Grand slams, epiphanies and victories. Don’t move so fast that the lessons of those breakthroughs don’t sink in. Not only should you make time to enjoy them, you should deeply reflect on what enabled those breakthroughs and what principles, strategies or tactics can be applied to other areas of your business.
2. What were the breakdowns?
There is no upside in brooding about breakdowns, but there is an advantage in doing post mortems to find the causes. Look for the whats and the whys that contributed.
No breakdowns in the past year? Good for you. But certainly you had some moments where you came close to experiencing disaster. Look for hidden lessons in what almost happened and why.
3. Who delivered?
To he or she much is given, much is expected. Are you taking commensurate care of your best performers and business partners? Do you even know who they are?
You can ensure the longevity of valued relationships by giving them the appropriate appreciation, time and care. Sometimes we take for granted those who deliver and inadvertently damage the relationship. And maybe those who delivered in 2013 need new opportunities and rewards in 2014.
4. Who disappointed?
In a perfect world we could count on every business partner to do what he promised. In reality, not all partners perform equally, and we often waste time with those who disappoint us. Evaluate who you need to improve or replace to make your business more efficient and profitable. Don’t go to disappointing people out of unexamined habit.
5. Where do you need to persist?
Results aren’t linear. They arrive in fits and starts. Because we haven’t seen a gradual payout from some efforts, we begin doing them less and eventually stop doing them altogether. It wasn’t that the effort was misplaced: The problem was our lack of persistence.
Evaluating what to persist at is both science and art. If evidence from others who have benefited is compelling, don’t quit prematurely because you haven’t seen a pay off yet.
6. What do you need to let go?
Don’t stubbornly cling to practices, relationships and projects that have never reached critical mass. We persist in the wrong things out of habit and fear of admitting failure. For instance, if you’ve had an important ‘to do’ on your list for months (or years), it’s time to ‘let it go’.
Now is a good time to free up needed resources by letting go of the unproductive, vexing or wasteful. You’ll find the practice freeing.
7. What are the biggest threats?
Don’t you, like me, see threats well in advance and yet refuse to deal with them until it’s too late? Most of us buy our home alarm system after the break in. It’s human nature to play by the belief, ‘It won’t happen to me.’
I’m not suggesting paranoia, but if you know it will eventually rain, what are you doing today to prepare? Identify that most serious threat that could derail your business. Take steps to avoid what you can and develop a contingency plan for what you can’t.
8. What are the greatest opportunities?
Just as we can ignore threats, so can we miss the opportunities around us. We are sometimes so busy trying to create opportunities that we don’t see the ones that already exist. Where are the biggest opportunities for you and your team going forward?
Reflection is powerful when it leads to recalibration. Once you’ve identified the what, consider the why, but don’t get stuck on it. There are insights to be gained from understanding, but in an imperfect world, you won’t always determine the reasons something did or didn’t happen (or determine them correctly). The money question is “What to do now?” Recalibration is a change in attitude, behaviour and/or direction. And therein lies your great opportunity in the year ahead.
Read Next: Seven Signs of Trouble to Look Out For
B. Top tips for dealing with business disasters
Now that you’ve evaluated 2013, you’ve got a clearer picture of where you’re at. Is your business performing as well as you’d hoped? Remember, no business is ever safe from harm. Your strategy for growth might be in place, but what about dealing with unexpected crises? This guide will show you how to plan for and bounce back from an unexpected crisis — and keep your customers in the meantime.
It’s going to happen some day: A key employee is badly injured in an accident; a power outage knocks out your computers; a fire takes out your warehouse.
Unexpected emergencies can momentarily shut down operations, or even worse, put you out of business for weeks and force your customers to go elsewhere – and stay there. Are you prepared for this? It’s not as difficult as you think. Here’s how to plan for the inevitable.
Step 1: Determine what can go wrong
The first thing you should do is complete what’s commonly referred to as a vulnerability or risk assessment. This assessment will identify what could go wrong, the effect on your business if something does go wrong, and what priority you should take in minimising your risk exposure. During this assessment, you should:
Learn the threats and risks your business faces. Threats are anything that could happen to your people, processes, infrastructure or reputation, including natural threats (hurricanes and tornados), technological threats (machinery malfunctions), or human threats (stealing and strikes).
Once you’ve identified the possible threats, determine how vulnerable you are to them. How reliable is your data back-up system in the event of a power outage? Are your employees properly trained for an earthquake? What about your security system – how capable are you of preventing customer or employee theft? Determine what your most vulnerable areas are and what mitigation measures are needed to protect them.
With threats and vulnerabilities identified, start prioritising.
Rank your threats in order of frequency. Now rank your vulnerabilities to these threats by the impact they’ll have on your business; for example, inventory results show employee theft is R50 000 per year, computer failure costs R1 000 per hour, and so on. Apply those numbers to the prioritised risks, and now you have a risk exposure for each threat. The higher the risk exposure, the more it’s worth your while to protect yourself from that threat.
Step 2: Develop a plan
An emergency action plan is a written procedure manual for dealing with the threats you’ve identified in step one. Some of the components of your plan will be prescribed by law, regulations or good business sense.
When there’s a legal requirement to do something, you’re usually – but not always – told how to comply. There are a number of different ways to create your emergency plan; however, all emergency plans tend to have the same basic elements. Emergency actions plans should contain the following minimum elements documented in writing:
- Clear, written policies that designate a chain of command, listing names and job titles of the people or departments responsible for making decisions, monitoring response actions, and recovering back-to-normal operations
- Names of the people responsible for assessing the degree of risk to life and property, and who should be notified for various types of emergencies
- Specific instructions for shutting down equipment and production processes and stopping business activities
- Facility evacuation procedures, including a designated meeting site outside the facility and a process to account for all employees after an evacuation
- Procedures for employees who are responsible for shutting down critical operations before they evacuate the facility
- Specific training, practice schedules and equipment requirements for employees who are responsible for rescue operations, medical duties, hazardous responses, fire fighting and other responses specific to your work site
- The preferred means of reporting fires and other emergencies.
- Finally, ensure that you have a way of contacting your customers should you have the need. A press release, an email or a sign that directs them to a new location or provides them with information on when you’ll be back in business go far in reminding folks that your reputation is dependent on taking care of your customers.
Step 3: Be ready to respond
Once you get the basic emergency action plan written, tell your employees. Make sure they know what’s expected of them in an emergency – any kind of emergency.
If they haven’t been involved before, give them an opportunity to ‘dry run’ the plan and talk over how things might go in an emergency scenario (this is called a tabletop exercise). You might find that there are changes you need to make to some of the plan’s details. That’s good. No plan is perfect, and it’s not even a plan until it’s been tested.
Be sure to share your response protocols, especially your evacuation procedures, with the local fire department, emergency medical service and police department. These are likely to be the first type of assistance to arrive on the scene, and they’ll need to know what actions you’ve taken.
When they’ve been apprised of your emergency action plan ahead of time, they’re better prepared to help. They’re also experienced with these kinds of plans and can provide valuable insight that you may want to incorporate into your written plan.
Some other areas of training for your employees that’ll help mitigate the effects of an emergency and provide huge returns in employee satisfaction and business reputation include:
- Emergency equipment shutdown
- Emergency notification procedures
- Building evacuation procedures
- Fire extinguisher use
- Basic first aid
- Cardio-pulmonary respiration (CPR).
- Training is an important and relatively inexpensive part of emergency preparation that may save a life. More important, proper training can prevent an emergency from becoming a disaster and make all the difference between closing down operations for a few hours and being out of business indefinitely.
Step 4: Get back to business
Once you’ve implemented the first three steps, take the time to think about the worst-case scenario and make some plans for how you’ll recover. Some questions to think about – and answer – include these:
- Where will you find a new location to work?
- Where can you get replacement equipment and computers?
- Who will help clean up after the storm/fire/disaster?
- How will you recover your critical data – the computers or original documents damaged by water or fire?
- How will you reach your people?
- How will they reach you?
- How will they get to work?
- What if your suppliers aren’t as prepared and something happens to them?
- What programmes are available to help your business or help your people (Red Cross, Salvation Army)?
- There are many more questions you could ask yourself, but I’m sure you get the idea. What will it take for you to get back into business quickly? You might be very proud of getting your operations back up in three weeks, but if your competitor does it in one, where will your customers go? How much will your reputation suffer?
Remember, there’s no way to guarantee that once you’re in business, you’ll stay in business. It’s up to you to plan ahead and be prepared by creating the most resilient business possible.
Read Next: Can Your Business Survive If You’re Gone?
C. See if you score high on the financial fitness quiz
The current economic environment creates a dilemma of sorts for entrepreneurs. Due to the economic slowdown and a lack of sales, businesses have seen their balance sheets deteriorate to the point that they’re no longer a viable credit risk.
Thus, banks have restricted their credit and lending policies, severely impacting entrepreneurial firms. What’s the solution? Entrepreneurs need to focus on the big three: Cash, sales and debt. Alongside is a simple quiz; the higher your score, the better you are financially.
1. Cash flow: How long can you pay your current monthly bills using the cash you have on hand?
- 31 to 60 days +3
- 7 to 30 days +1
- Less than 7 days -3
2. Monthly cash flow divided by interest expense:
- Greater than 2,0 +3
- 1,01 to 1,99 +1
- Less than 1,0 -3
3. Revenue growth over the past year:
- Increased +3
- Held on to customers +1
- Decreased -3
4. Percentage increase in new customers (from last quarter)
- Greater than 10% +3
- From 1 to 10% -1
- Lost up to 10% of customer base -3
5. Debt to assets ratio:
- No debt +3
- 01 to ,79 +1
- Greater than ,80 -3
6. Business credit card debt:
- No debt +3
- R10 000 to R25 000 +1
- Greater than R25 000 -3
Remember, the solution to surviving tough times is balancing the three-legged stool: Cash, sales and debt. Pay attention to all three and you should do okay. Add up your score below to see where you are:
- Severe risk of failure: -11 to -18
- High risk of failure: -3 to -10
- Elevated risk of failure: -2 to +3
- Guarded risk of failure: +4 to +11
- Low risk of failure: +12 to +18
Look To The Future
By protecting your employees, their future and their income, you’re also protecting your business says Walter van der Merwe, CEO of Fedgroup Life.
It’s proven that staff members perform better when you show them how valued they are. But, investing in your staff members’ futures goes above and beyond the bottom line.
Staff members value recognition for the contributions they make to the business. However, this does not necessarily need to take the form of financial rewards or incentives. As an employer, you can demonstrate your employees’ value to the firm through appropriate insurance cover in the form of comprehensive employee benefits, which show that you’ve considered their long-term wellbeing and that of their family.
Of course, there is a financial commitment on the part of the employer to contribute towards insurance cover, but this goes towards the future prosperity of staff members, rather than an immediate financial benefit. Employee benefits offer security against the possibility that something detrimental will happen, and in instances where the benefit is needed, will have a lasting effect on their lives.
Ensuring that staff members have the financial means to get the best standard of medical care and treatment following injury or illness, will increase the likelihood that they will make a full recovery, and within a shorter period of time. This will enable them to possibly return to work sooner, with full capacity to continue contributing meaningfully to the business and adding value. In this way, employee benefits demonstrate to staff members that they are a significant and considered part of the business, not only at the present point in time, but also for the long term, and they also ensure a degree of business continuity — particularly key employees.
Loss of income
The biggest risk for every employee is a loss of income. Whether their incapacitation results from an injury or illness, an inability to generate an income to support their lifestyle and their family will severely impact an employee’s quality of life. This loss of financial security is therefore the most consequential risk that should be protected against through appropriate forms of insurance, such as lump sum or annuity income protection products.
Another pertinent risk that business owners should address is the need for adequate life cover. Should an employee, who is possibly the primary breadwinner of a family, pass away, their surviving dependents may be left destitute without their financial support. Employee benefits that include a life insurance component will ensure the financial wellbeing of family members left behind in the event of an employee’s untimely death.
Another important risk factor to consider is the threat of chronic or severe illness, and the high costs generally associated with treatment. As employees age they become more susceptible to various types of illnesses. In instances where they fall chronically ill, they require the financial means to cover their medical costs, and generally require time away from work to recover. This is why dread disease or critical illness cover is another vital component of a comprehensive employee benefits scheme.
Choosing the right provider
When structuring employee benefits there are certain principles that should be applied, regardless of the size of company, or the income of the staff and their socio-economic circumstances.
Foremost among these is the selection of an employee benefits provider, along with the appropriate products and the associated cost implications. This role is best fulfilled by qualified, experienced and independent financial advisors who can offer unbiased advice. These trained and certified experts are able to advise employers on how best to support their staff members through the implementation of suitable employee benefit schemes by recommending the most appropriate solution structure, based on factors such as the gender, age, role and income of employees, and their financial responsibilities. This information helps advisors to select the best mix of products that offer suitable cover to meet the unique needs of the employer and their employees, while also considering affordability.
From a personal perspective, every employee gets peace of mind knowing they are protected should they no longer be able to work, or get sick, and that there are financial provisions in place for their family should they pass away. While they contribute a small premium, they will receive an outsized financial benefit should they claim in comparison to the immediate cost.
As it relates to the business, providing comprehensive employee benefits positions the company as an employer of choice, because the organisation shows that it cares for its staff. It also demonstrates that the employer considers their staff to be valuable, which is a powerful means to attract and retain the best talent.
Protect the future
The human psyche is hardwired to choose instant gratification over receiving a potentially greater reward or benefit sometime in the future. People generally tend to discount the value of rewards they’ll receive in the distant future due to a disconnect between what the present self believes will benefit the future self. In this model there is an opportunity cost involved in relation to what someone could afford now by rather spending the insurance premium on items or services that satisfy their more immediate needs.
This is the fundamental reason why insurance is considered a grudge purchase. We ultimately pay a premium every month towards an intangible benefit that will only be realised if and when a claim is made. And, in the case of insurance, that benefit is only realised when something horrible happens — another reason people shy away from examining this basket of products.
The best way to combat this innate psychological reasoning is through continued education, which can help people understand the purpose and the prolific impact that insurance will have on their lives should they ever need to claim. This requires contextualising the possible implications for an individual five to ten years from now, illustrating in real-world terms how different their situation could be in a worst-case scenario, both with and without appropriate insurance. This is a stark but effective means to demonstrate the need for adequate cover.
How To Choose The Right Group Risk Cover For Your Business
Your clients and business partners are likely to be your main focus when you start out as an entrepreneur. But as your venture grows into a fully operative business of scale, your employees will matter just as much. That’s why it’s important to ensure you provide adequate employee benefits, and when it comes to group risk cover, it’s becoming increasingly important to find a solution that matches the needs of everyone in the business.
It’s no secret that the world of work, as we know it, is changing. In a 2017 employee benefits study, US insurer MetLife found that 58% of employees surveyed “want customised benefit options based on their personal information”. And according to the same study, 73% of employees believe their employer is responsible for employees’ health and financial wellbeing. And in spite of this expectation, modern employees are unlikely to stay with the same employers for very long, because technology continues to create new opportunities.
It is within this context that it’s important for you, the business owner, to make your business as attractive as possible by offering your employees benefits that truly match their needs. Start by thinking of yourself as a custodian of their financial security. And in terms of group risk cover, the financial security not only lies in the cover itself, but in offering benefits that add real value to your employees’ financial planning – especially when you consider that it is your employees who are contributing towards their cover.
Why do you need group risk cover for your business?
Employers buy group risk cover for the people in the company to cover their future pay cheques in case something happens where they can’t work before they retire.
But this, unfortunately, is not the case with traditional group risk products, which typically offer blunt amounts of cover that is equal to, for example, three years of pay cheques for everyone in the company – irrespective of how many pay cheques they have left before retirement. As a result of this approach, younger people in the company have less cover compared to what they need, relative to their older colleagues who have fewer pay cheques left
Traditional group risk products also offer very little flexibility, leaving employees with little, or no option to buy more cover above what employers secured. They also don’t offer a choice between lump-sum or recurring payouts when members claim, or always secure the ability to take their cover with them, should they decide to leave the company.
So how will you know you’ve selected the right cover?
Start by asking your financial adviser to look out for a product that works out how many pay cheques each employee needs to cover, and then gives every person in the company the same level of cover in proportion to the amount of pay cheques left until retirement. By following this approach, your employees’ cover will provide more people in the company with much more cover. There already are forward-thinking group risk cover providers in the market that manage to offer up to 50% more cover by following this approach.
Secondly, ask your financial adviser if your employees will be able to buy more cover over and above what you secured. There are innovative products on the market that offer up to double the cover free of underwriting, which enables your employees to benefit from the insurability you’re providing them, and to close gaps in their insurance.
And – in the spirit of the modern world of work with a more mobile workforce – these innovative products enable employees to take the cover with them when they decide to leave your company.
It’s also important to ask your financial adviser if your employees will be able to choose between a lump sum and recurring pay-outs when they claim. Traditional group risk policies tend to expect employers to make one choice between lump sum or recurring payouts on behalf of all of their employees when they take out the cover. Forward thinking cover providers have turned this approach on its head, offering employees the option to choose between recurring or lump sum payouts when they claim.
The importance of claims certaintly should never be understated, starting with obtaining a clear picture of the clinical conditions the group risk cover actually covers. There are new players in the market that provide extensive and transparent lists of clinical claims conditions for additional expense needs, covering more than 200 conditions.
And exactly how permanent does the insurer view a claim for a permanent condition? For example, if an employee is to be diagnosed with Stage 4 cancer, will he or she receive a 100% payout on diagnosis, without the prospect of ongoing reassessment? A needs-matched product offering would never require the reassessment of permanent expense needs claims.
In conclusion …
You wouldn’t expect your employees to work under dangerous conditions. So why would you select a group risk product that will not serve in their best interests when they need it most? That’s where needs-matched group risk cover comes to the rescue – not only for your employees, but also for your business by providing security and benefits offering real value in the modern world of work.
How to Take Risks That Win (Almost) Every Time
Knowing which risks to take, and how to take them, can be extremely helpful in stacking the odds in your favour.
Looking 13,000 feet down out of an airplane, parachute pack secured, your heart beating in your throat, must be one of the most terrifying experiences imaginable. Though not all risks are life-threatening, all risks are frightening. As humans, we’re constantly afraid of failure, of doing something wrong and of having to deal with the consequences. Yet, at the same time, there is nothing more rewarding than reaping the benefits of a risk gone right – of landing safely ground, to build the earlier metaphor.
For entrepreneurs, risk taking is a necessity of the job. After all, we’re never quite positive that things are going to work out the way we envision. We make choices daily which affect our business, and we can never be absolutely sure that we’re making the right ones.
Knowing which risks to take, and how to take them, can be extremely helpful in stacking the odds in your favour. While risks are unavoidable, approaching them strategically can be the best way to decrease your parachute’s chances of failing, so to speak, and to produce measurable results that you would never have achieved had you avoided the risk in the first place.
In order to hone your risk-taking skills, here are some guidelines:
1. Information is your friend
The more knowledge you have about any given topic, the less risky your endeavours will ultimately be. For example, many of the most steadily successful brokers on Wall Street are those who understand the patterns of the market better than anyone else. While there are always going to be those people who make millions off a risky uninformed bet, they are the same people who most likely will lose all their earnings on a single trade. Traders who build a sustainable career for themselves are the ones that have deep knowledge of the industry.
Similarly, you should be an expert in your field. You should know your industry well – your product or service you are providing. You should understand the buying patterns of consumers, their motivation and pain points. What drives them to buy your products? Where and when do they buy? What makes them stop buying?
As an entrepreneur – or in any profession that requires risks, really – you’ll want to have as much information as possible. The more you know, the fewer unknowns there are. The unknowns, ultimately, are what makes an action risky.
2. Assess the risk carefully
While risk is a reality of life, there is also something to be said for strong assessment skills. Being able to look at a risky situation and decide whether or not it’s worth taking is a hallmark of a good businessperson.
Venture capital investors, for example, spend their entire careers deciding which companies are worth risking time and money on. Those who throw their money around recklessly, while admirable for their risk-taking, are not necessarily the most successful investors.
Being a good risk-taker involves using the information you have to assess a situation and decide whether or not the risk is worth it.
3. Learn from failure
Appreciate that all risks are learning experiences. Especially those that don’t pan out.
On some accounts, failure is actually more valuable than success. While failures may not lead to an increase in your bottom line, you can use the opportunity to glean important information about what you’ve done wrong, where you misstepped and how you can move forward in the future.
The biggest mistake many people make is seeing failure as a measure of who they are, rather than a measure of where they can go. We’ve all heard that failure is feedback. Most successful entrepreneurs failed at many ventures before they created that million-dollar offering. Most overnight successes took many years to make. If you take a risk and fail, learn from it. Ask yourself what you can do differently next time, and then move on. The only failure is not learning the lesson that it provides and using it to hone your next endeavour.
According to Mark Zuckerberg, “The biggest risk is not taking any risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”
Taking risks is the only way to go from here to there. Even failed risks move you closer to your goals if you can turn that failure into valuable learning and a plan for improve your results next time.
This article was originally posted here on Entrepreneur.com.
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