Business is inherently risky, whether big or small. You are rarely ever sure of what awaits you daily. The bigger businesses are better off, however. They can often have a softer landing when unexpected shocks happen because they have the resources set aside for that. For small businesses, the story is different. There is hardly any money to invest in risk management interventions often. They survive by luck or by the grace of God. This is untenable. No matter how small your business is, you always need to look at potential risks, assess their potential impact then make decisions and monitor them consistently. In view of the above, we look at some of the risk management strategies that small businesses can employ in order to survive unforeseen circumstances.

Cash flow management

Small businesses usually do not have the luxury of millions of dollars just sitting in the account waiting for a rainy day.  For that reason, they have to manage their cash flow risk efficiently and tactfully. At the end of every month, you always have bills to pay. Salaries, loan repayments, procurement of stock or raw materials are all important costs that will most likely leave you dry financially. You need to sit down and strategize how you can keep your business open even if what you are making is not enough to cover basic coats. As such, it is always prudent to set aside three or more months cash reserves so that even if you make losses, you can still meet the necessary financial obligations with greater ease. You will note that most start ups are more at risk of financial problems than their more established counterparts. Navigating this pitfall needs precise forecasting as well as enough reserves. Manage your costs wisely and always endeavour to stay within budget. Disgruntled employees and customers are the last thing you need. If you encounter financial problems, communicate with your team early and make them understand your situation. Do not make excuses, rather, fight to remedy any situation in the shortest possible time.


Due to economic challenges, necessities like insurance are often overlooked. Risks of theft, fire and others strike when you least expect. Insuring your business transfers the risk from your business to the insurance company. Of course, you pay for the services but you will notice that the monthly premiums are less painful than having to start all over again using your own funds if your shop is ravaged by fire. You need to cover your business premises, vehicles and other assets comprehensively. The Glen View informal furniture market has been destroyed by fire several times and the question of whether the entrepreneurs there are insured always comes up. It is understandable that small businesses may not always have enough money to afford monthly insurance premiums but its importance cannot be overemphasized. If you know that you are at risk of fires or other damages, you cannot afford to be un-insured.

Employee retention

Due to a barrage of problems that the country continues to face, many businesses are performing below capacity. Some are failing to cope with inflation to an extent that their employees are lowly paid. Some receive their salaries late or not at all. Many end up opting to cross the border to other countries where salaries and working conditions are considered to be better. The risk of labour turnover is therefore, higher now more than ever. It must be managed carefully. Without a good employee retention strategy, you may soon lose all your skilled professionals and this affects the quality of what you produce. It also costs you time and money as you try to replace employees who have left. Despite current hardships, you need to strive to keep your employees happy. If you cannot pay better salaries, find other incentives that can motivate your team. That way, they won’t think of leaving you. From school fees assistance, paid vacations and more flexible working arrangements, find out what works for you. During basic commodity shortages, we have seen some companies procuring these goods and giving them to employees at subsidised rates or for free. Although this may not completely avoid the risk of labour turnover, it tends to reduce it to manageable levels.

Manage your reputation

Another risk management strategy that small businesses can use is to manage their reputation. How people see you and your company is important. If people do not like you or your brand, they will not buy from you. With social media usage increasing, your reputation may be made or damaged in one click, one tweet. So, you need to be mindful of what you or your employees put out there. Happy customers will go to social media to advertise on your behalf but those who are unhappy will dent your image at every turn. To avoid unhappy customers, you need to train your employees to perfect the art of customer service. Deliver on all your promises and never short-change your customers. Even if your business is doing well, you need to guard against complacency.

Risks can be avoided, transferred, reduced or simply accepted. Whatever you do, make sure your business is better placed to reduce the effects of the risk. While this article does not cover all the risk management strategies that you will ever find, they are a starting point. Employ them effectively at all times and according to your circumstances.