A personal klutz moment prompts some thoughts about risk management for home based businesses

I had an unpleasant encounter with a Danger sign recently, on a local beach where we go walking most mornings. Once I had recovered from the initial shock, the experience made me think about risk management.

To get this in context I must explain, more than somewhat to my own embarrassment, that this sign is, as far as I can tell, on a stretch of a couple of adjoining beaches where we walk most mornings, the only object where I could conceivably bump my head.

So you would be perfectly justified in thinking that would not be an easy thing for me to do.

Well, on the morning in question I did.

How could I have been so dumb?

What happened was,  I was climbing over some rocks at the time, heading for the pathway connecting the two beaches, all the while looking down, watching intently where I was placing my feet so I didn’t stumble.

Which is how, straightening up, I got to bang my head on the only item conceivably available for the purpose in about half a mile or more of beach area.

I had in fact given myself a nasty bump, even drawing some blood (the sign is made of good old-fashioned sheet metal). Fortunately, my cap protected my scalp to some degree. The external scar has gone, embarrassment lingers.

Anyhow, after getting over the initial shock, and on the principle of turning lemons into lemonade, I wondered how I could put the experience to good use.

Need to consider all the risks

The lightbulb moment was that intelligent risk management takes account of all known risks, not just one most obvious at the time. And this has a special relevance for those of us who choose to work from home.

Iowa based business risk management expert Thomas M. Bragg has a thoughtful post on risk management and home based business, making the following very pertinent observation:

Home-based businesses don’t have a free pass that exempts them from the need for risk management. In fact, I would argue that they have a more urgent need because each risk that becomes reality has a much larger relative impact on a sole proprietorship than it does on a larger business. (100% of a sole proprietor’s employees will be involved in dealing with a crisis, while only a portion of a larger business’ employees will probably be affected by a similar crisis.)

Being entrepreneurial doesn’t mean ignoring risk

Making a broad generalization which I am quite unable to substantiate empirically, it’s my belief that professional people who make a decision to work from home rather than be employed elsewhere are in a real sense entrepreneurs.

One of the words I associate with being entrepreneurial is “courageous”. And that’s because another word that goes with “entrepreneur” is risk.

A lot of things can go wrong when you work from home, for example getting seriously ill and not having adequate health cover or income maintenance insurance to get you through that time. Then there are the clients who turn out to be more trouble than they are worth, or just don’t pay or at least don’t pay in a timely fashion.

Managing risk is part of our job description. And we will manage it better if we don’t wait till we’ve banged our heads on it, so to speak.

Need a risk management plan

And while I believe most home based professionals I know are well aware of the risks, I wonder how many of us actually have a risk management plan in place?

A plan that takes account of all the risks we need to consider. More than just a SWOT analysis, although that would be a start.

What plans do you have in place for risk management?