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How To Prevent Losses To Your Small Business

Aug 17, 2007
Losses to the company can result from fluctuations in the stock market, economic downturn, employee crime, and natural disasters. It is better to be safe than sorry, as many small businesses have found out too late. The first step to loss prevention is identifying areas of potential loss.

Loss prevention includes risk management, protecting the interests of the shareholders, and protecting the interests of the organization. It ensures uninterrupted business productivity and the helps the business grow.

Apart from strengthening the risk management strategies of the management, you also need to look into the employee risk management strategies. Many losses to the company maybe caused because of high insurance premiums on insuring the employees.

Cutting Down on Losses

Here are some steps you can take to cut down on your losses

1. Effective Management
The management at all levels needs to understand the company's goal of loss prevention, and undertake the same goals.

2. Employee Participation
No loss-prevention program can be effective, without the participation of employees. The employees need to be trained in loss prevention methods. You could enroll them in loss prevention training classes so they know what to do before, during, and after a situation that can cause loss.

3. Develop a Program
The loss prevention program should have a clear roadmap. You must develop ways to evaluate losses, predict them and avoid them.

4. Collaborate with other Businesses
In order to prevent losses, you should consider collaborating with other similar small businesses. You can work with other businesses on issues like audit practices, loss evaluation and using statistical ways of tracking trends. You could also collaborate on human resources, operations, risk management, and other related issues.

5. Focus on Key Areas
Loss prevention should not be a diffuse program that covers everything imaginable. Instead, you should focus on what can cause the most loss to your small business. In most businesses, losses are caused more by employee claims than by natural disasters. The key is to prioritize and then allocate more resources to areas that are more problematic.

Consider Alternatives
In case the essential services and supplies are disrupted, whom can you approach for help? Keep alternatives ready, whether for electric supply, essential raw materials, distribution, transportation, or promotion.

By considering all potential risk factors, you can prevent losses to your small business. Thinking creatively helps, since it gives you new ways to tackle old problems of losses.

Additional Help
If you are not sure how to tackle the problem of losses on your own, you can approach a small business consultant for help.
About the Author
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com.
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