Small and medium-sized enterprises (SMEs) continue to thrive and keep our economy growing. Even for these small-scale businesses, a usual day at work entails having to deal with a pile of paperwork, demanding clients, and challenging sales targets, among others.
One thing that SMEs forget, or postpone, perhaps owing to the daily demands of running a business, is risk management. Adequately managing risks is essential, if only to ensure the long-term success and survival of the company.
Bank of the Philippine Islands (BPI) recently had its first BizTalk, a quarterly business forum that aims to guide the bank’s existing clients and prospects on hot topics and issues that affect their operations. The topic was about risk management for SMEs.
If you run an SME, here are some tips shared by experts on risk management:
Preparedness equates to good business.
Acknowledging that your business will encounter hardships down the line is the first step in preparing for the future. Knowing what potential events may affect your business and having the foresight to manage their impact may just be the saving grace your business needs to continue its operations.
It is important for entrepreneurs to spot business warning signals so they can take full control, whether it is a crisis or disaster that needs to be addressed.
Master the nature of the business.
Knowing consumer preferences, competition, and economic factors helps a great deal in keeping your business on track and may even help you get a leg up. Being mindful of the state of the economy and scoping your competition can aid you in making decisions for the company. You will know what options your consumers have and what you can do to improve your own operations.
Recognize potential risks.
There are a variety of factors that may significantly affect the growth of a business, such as calamities or health concerns of employees. Therefore, it is advisable for SMEs to know the risks they face – property risk, which involves damages incurred to property; human risk, which concerns staff; and information risk, which concerns the danger of falsified or misleading data, to name a few.
Is your office in a safe building? Are employees given just compensation? Can your company handle the risks involved? These are just some of the questions you need to answer.
Partner with a trusted financial institution.
Having insurance can help secure your finances and help you manage potential unfortunate events. Set aside some funds for this so you can handle the financial demands that may arise in the advent of a crisis. Ask your partner bank what programs or services they offer to help you mitigate risks on your business.
For instance, BPI offers Business Care Advantage, which is an insurance that aims to protect the business from possible financial loss, hazards, and destruction. This specifically caters to SMEs and covers fire, lightning, earthquake, flood, typhoon, riot, broad water damage robbery, and other extended coverage such as an explosion, falling aircraft, vehicular impact, and smoke damage, among others.
Take advantage of government resources.
For SMEs, it may be difficult to find the resources needed to start a business and keep it running. Enlisting the help of your local government can give you a boost in running your business.
Check out the government’s flagship financing program for MSMEs dubbed as the Access of Small Enterprises to Sound Lending Opportunities or (ASENSO) Program, which extends loans to MSMEs, providing them with manageable terms to help them expand and grow their businesses. There’s also Pondo sa Pagbabago at Pag-asenso (P3), where loan amounts to end-borrowers can range from P5,000 to P100,000, at a maximum interest rate of 2.5% per month, with no collateral.
Likewise, the government has been active in training and educating MSMEs, and has several programs rolled out across the country, such as Mentor ME Program and SME Roving Academy. It has also established Negosyo Centers run by the Department of Trade and Industry (DTI), to promote ease of doing business and facilitate access to services for MSMEs within each Center’s jurisdiction.
Be mindful of data privacy.
Furthermore, you must also be aware of the Data Privacy Law, which prohibits the misuse or exposure of information of a person. Although it is geared more towards the protection of an individual, businesses also need to uphold the rights of employees and their own businesses. There are dire consequences and condign punishment for mishandling data of clients and employees.
BPI Business Banking Head Eric Luchangco said most SMEs in the country today do not have adequate or concrete risk mitigation measures in place. “In fact, during breaks, a lot of our attendees approached our representatives to inquire if there are services they can avail to help mitigate the risks identified in the forum.”
“An entrepreneur must have the ability to point out what will work or not in his or her business. There will always be challenges and risks. Entrepreneurs must be able to prepare, assess, and take control when crisis occurs,” said Imelda Fortugaleza, Head of Compliance and Data Protection of BPI Philam Life Assurance Corporation.
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