Understanding and dealing with the risks inherent within any business is vital to long term sustainability. Key times when risk analysis is necessary are when a business is starting out or expanding.
CIMA qualified accountants identify and manage risks.
Kim had always wanted to run a cafe and the opportunity came up for her to take over the lease of a property in her local village. The property had previously been a post office but Kim was sure it would make a wonderful location for her dream business.
Fortunately, Kim's sister-in-law was a management accountant and she offered to take Kim through the business planning process, so she could see what she might be letting herself in for before she committed to anything.
Kim came to realise that here were lots of aspects to setting up and running a business she was not aware of. In particular, she had little understanding of the scale of costs involved in getting a café started from scratch. By the time they had drawn up a cash flow forecast, detailing all the things the business needed before it even opened its doors, the start-up costs were in the region of £100,000. To raise such a sum Kim would have to provide personal guarantees to the bank.
Kim decided that the risks to her family's financial security were just too great and did not proceed.
By drawing up a clear plan on paper, which identified the inherent risks of Kim's new business idea, she was able to make a measured decision before committing to it.
Running your own business can be the biggest thrill you will achieve in your working life, or the most stressful and demoralising experience you can imagine. On some days it is both! So how do you set up your business to give yourself the best chance of success?
Provided by Fiona Bevan →