When you start a business you need to be aware of the risks you are taking.
Government statistics show that 97% of new start-up businesses fail within 3 years.
To prevent this from happening to your business you need to understand RISK.
By understanding Risk you can apply yourself to the areas of the business which are really important for the survival of the business.
Risk Management is a process of analysing what can go wrong with the business and what can be done to alleviate the problem in a cost-effective manner.
Entrepreneurs need to be familiar with the likely occurrence of a risk and the consequences of such risks if they happen.
Please see the diagram below:

Quadrant 1 risks have the least impact and the least consequences to the business, whereas Quadrant 4 risks have the most damaging consequences and the highest likelihood of occurring.
Therefore all risks need to be mitigated if the business is to be successful.
Let’s discuss the four Quadrants:
Quadrant 1: Minimal Risks
Risks in this quadrant need minimal attention because they will have the least impact on your business.
e.g. The light bulb in the stock room fails. You can replace the bulb at any time, but your shop can continue to operate.
The cost of the replacement bulb and fitting it is minimal and the business can continue even with some inconvenience.
Quadrant 2: Irritating Risks
The risks in this quadrant are ones you need to be prepared for.
e.g. You are giving a presentation and when you arrive at the venue your laptop with your presentation on will not boot up.
The Laptop can be repaired but there could be a delay in giving your presentation.
The solution is to have the presentation stored on a hard drive or memory stick that you take with you or in the cloud so that you can run it on another computer.
You could also print the slides as handouts and deliver your presentation from this printed copy.
The solutions here are having a “Plan B”
Have a set of procedures or a checklist to ensure that you have everything you need to complete your task.Ensure that you always have spare ink cartridges especially when you have an important document to print.
I order ink cartridges for my printer in threes and I re-order when I put the second cartridge in. This means I always have a spare cartridge.
Quadrant 3: Insurable Risks

There are risks that can and should be covered by insurance policies. Underwriting companies can provide specialist insurance for many risks.
One of my clients is a Tree Surgeon and therefore he has a policy which covers the damage if a tree should come down not as planned.
Usually the Risks in this Quadrant can be costly. You should make sure you hold all the policies you need to be legal:
- General Liability Insurance
- Property Insurance
- Business Contents
- Business Equipment away from the premises (Laptops, mobile phones)
- Business Interruption Insurance
- Public/Product Liability
- Employers Liability (Compulsory if you employ staff)
- Professional Indemnity Insurance
These are the usual policies required for a UK business. However if you are in a specialist trade then contact your Professional or Trade body to ensure you have all of the insurances you need.
Quadrant 4: Damaging Risks
These are the Risks which could close your business.
Many of these Risks look non-threatening. If these unmitigated risks are allowed to accumulate then even a FTSE 100 company could be brought down.
The consequences of these risks are especially dangerous to a new start-up or a small business.
Examples of Damaging Risks are:-.
- Unidentified Market need
- Unimplemented Innovation
- Unforeseen Costs
- Losing to the Competition
- Company mismanagement
- Not Managing Credit Control and Cashflow, which can lead to Bankruptcy.
Anything that you think will be detrimental to your business is Damaging RISK.
If you ignore these risks you could lose your business.
We know that in order to survive as a business and not be one of the 97%, we need to mitigate risks.
We know there are many risks that have to be dealt with and some may be difficult to understand.
However, we at Home Counties Business Advisors have the skills and experience to help you identify and overcome risks, especially in that all important 4th Quadrant. For more advice on managing risks in your business, why not get in touch with Edward.tudor@hcbusinessadvisors.co.uk for an exploratory meeting or phone call.