Many entrepreneurs and business publications claim that perseverance is one of the main requirements for a small or medium business owner who wants to be successful in today's complex business world.
And I agree; we must keep it up every day - or we will soon be out of business. I actually see a lack of perseverance as a risk in a company; a weak point that MUST be addressed...
However, it will not help you as business owner to persevere while sailing a sinking "Titanic," full of holes (i.e. threats/risks in- and outside your business eating away your profits*). Your determination will NOT help you at all then. You need to fix the leakages (i.e. causes of profit loss) first, or your ship will go down in any case!
Employ perseverance in the right way - be determined to fix the profit erosion holes in your businesses first (i.e. to profit from your business risks) and then be decisive to profit from your business opportunities as well!
[*In short, a business risk is ANYTHING that has the power to eat your profits, i.e. any event, action, decision, lack of action or decision as well as any circumstance in- or outside of your business that causes or could cause PROFIT EROSION. It is a generic term for the many causes/factors/threats that have been identified thus far as reasons for business failure - no matter whether these causes were of strategic, operational, financial or legal nature.]
How?
You need to try to pinpoint ALL your business risks (i.e. the pitfalls in your businesses) and to counteract it! Unfortunately, a business owner does not face only one or two risks in his/her business but MULTITUDES of threat agents, waiting to cause damage and loss and to eat his/her profits! It is NOT possible to identify all of them at once and to shoot at it from the hip!
We therefore need to strategically PLAN for this battle and to use survival techniques to PINPOINT and COUNTERACT our enemies (our business risks)!
In short you need to enforce and perform profit protection planning or risk management in your business on a regular basis (and you need to involve your employees as well). Among other things you need to:
1) Identify and assess your current and potential business risks (i.e. the profit erosion agents in- and outside of your business).
2) Calculate the current (or potential) negative financial impact of these risks (i.e. the profit erosion in monetary terms).
3) Identify and assess current or possible countermeasures (controls) to minimize the occurrence or impact of these risks.
4) Calculate the cost of current or possible countermeasures (controls) - so as to determine whether or not your countermeasures or possible countermeasures are justified on a sound economical basis.
5) Design, implement and maintain adequate business strategies and systems (including policies, procedures, standards and business structures) in your business.
6) Monitor the results of your profit protection initiatives.
By performing abovementioned steps, you will not only profit from your business opportunities but also from your business risks (by reducing the negative financial impact of threat agents on your business)!
A sinking "Titanic" - To learn more about this author, visit Michiel Jonker's Website.
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