Risk assessment is a key part of business planning.

Risk assessment is just as important as optimism when it comes to business planning. Photo: Shutterstock

Starting and maintaining a business is hard work, and it takes a lot of effort. It’s easy to get burned out or lose hope, especially when things get tough, which is why a lot of advice is focused on staying positive. But while it helps to stay positive and focus on ways to improve your situation, it’s important to remember that things can go wrong as well.

This is why it’s important to think about and plan for risks. Doing a risk assessment on your business once or twice a year is a good way to keep ahead of potential problems. Sit down and think about possible risks that might face your business, how to address those risks, and who in the organization should be responsible for addressing them. This should be a rational exercise, though, and you should focus on realistically possible risks, which can be responded too. Overarching changes in economies and markets aren’t risks associated with your business alone. A sales slump might be.

The point of this exercise is to try to balance optimism with careful risk assessment. You don’t want to get bogged down in all the things that can go wrong; rather, you want to get an idea of what might go wrong, and how you can deal with it. It helps to assign priority to these risks as well, so you can focus first on the things that might take more effort, or which need to re resolved sooner.

Determine what the risks are before you start figuring out how to deal with them. You might come up with more as you’re working on the assessment, but you also might come up with ways to deal with risk C while dealing with risk A. Record all of this—the risks, the responses, their priorities, everything. Make it accessible so you can refer to or add to it as needed. A little preparation can go a long way.