Reducing risks: how to move from reactive to proactive


Date: 8 June 2022

Wearing a life jacket to reduce risks

Every business faces risks. Statistics show that up to 20% of start up businesses fail within the first year. In some cases, it's impossible to avert disaster, but often, there are ways to reduce risks and avoid metaphorical icebergs during the early days. In this guide, we'll outline key risks and causes of new business failure and provide advice to encourage a proactive approach.

Common risks facing start up owners

All company directors face challenges and obstacles. Susceptibility to risk is often higher among new businesses, as owners and teams may not have the experience, knowledge, and tools in place to negotiate hurdles or respond to problems quickly enough. Adopting a proactive rather than reactive mindset can help new businesses to reduce risks, prevent issues and ensure that they respond rapidly to aid recovery and minimise disruption. All start ups are unique, and they may encounter different risks, but there are some common themes among new ventures. These include:


Most new business owners will be aware of the threat of cybercrime and security breaches, but they might not be familiar with statistics related to small businesses. The headlines tend to focus on high-profile data leaks or ransomware attacks that target multinational corporations with thousands of employees and customers. It may seem like large businesses bear the brunt of cyber attacks. In reality, over 40% of cyber attacks target small companies.

Downtime and security breaches can spell disaster for start up firms. They contribute to financial losses and reputational damage, which are often terminal. Around 60% of those targeted by cyber criminals will go out of business within 12 months.

Security is a real threat to start ups and small businesses, but there are ways to manage risks and strengthen defences. Protecting networks, systems, and devices, updating and upgrading software and technology, implementing security policies and providing cybersecurity awareness training can all help to lower risks and enhance online safety and security. If your employees know how to spot scam emails, for example, they can report the problem, delete the message, and block the sender. Without the relevant training, they may open the message, click on the link, or respond to an email, inadvertently sharing data or unlocking access to sensitive information.

If you don't have IT experts on your team, it's worth considering working with an agency to analyse and evaluate the protocols and security measures you have in place, offer recommendations to improve security and monitor systems to detect suspicious behaviour.

The issue of security has become increasingly important for small business owners as threat levels have risen and staffing structures have changed. Many employees now have flexible hours and working arrangements, which means that they are either remote or hybrid workers. If your business has a BYOD (bring your own device) policy, or you have employees working from home or remote locations, it's essential that you update protocols and introduce new guidelines to cater to different environments and respond to new challenges.


Most of the start ups that go out of business do so because they cannot stay in the black. Setting up a business can be costly, and often, it can take time to pay off start up costs and start generating profits. In addition to the cost of establishing a new business, new companies may also have barriers to overcome in terms of wider economic challenges or changes, which impact the market, consumer demand and running costs. The cost-of-living crisis is an example. Running a company costs more now than it did five years ago and there's no clear end in sight in terms of when prices will stabilise. Expenses, such as fuel and gas and electricity, are higher for businesses and their customers. Increasing costs mean that consumers have lower levels of disposable income, which affects spending. If spending goes down, the demand for products, particularly non-essential goods, falls.

As an aspiring business owner, it is vital to consider the timing of your launch and to monitor levels of demand closely within target demographics and groups. It is also essential to consider costs and how they may change and fluctuate in relation to national and global issues that impact the economy. Where possible, new businesses should try to keep outgoings low and look for ways to increase productivity and efficiency to maximise profits and reduce risks.

Planning plays an instrumental role in protecting new firms from financial risks and cash flow problems. Keep a close eye on the accounts from the outset, minimise expenses at the start and set aside a contingency fund to cover unexpected costs. Use accounting software to manage the books and respond to early warning signs that indicate a high risk of cash flow issues down the line.


New businesses are launching in an era when over 90% of consumers check online reviews before contacting a company or buying a product. Brand image and reputation have never been more important. Negative feedback, bad press and examples of poor customer service can put new firms out of business before they even have a chance to conquer the market. Negative news stories and reviews can go viral in an instant. Figures show that up to 96% of customers will leave businesses as a result of bad customer service.

The best way to protect and enhance your reputation is to prioritise service, customer support and customer experience from the beginning. The customer should come first, and small business owners and their teams should be proactive in providing an enjoyable, stress-free, professional service. There are some simple ways you can do this:

  • offer access to responsive customer support
  • provide easy access to information and help
  • greet customers with a smile
  • make sure you have enough staff to ensure that processes run smoothly and efficiently
  • make your customers feel valued and respected
  • reward loyalty
  • encourage clients to return
  • monitor performance
  • use customer feedback. 


All businesses face risks, but new businesses are particularly vulnerable. Facing challenges is inevitable but there are ways to reduce risks. Being proactive can help you to spot danger, prevent problems, save time, effort and money, and enhance your reputation.

If you are a start up owner, or you're thinking about launching your own business in the future, take these tips on board to help you identify hazards and dangers and put processes, policies and procedures in place to protect your business, improve your brand image and navigate choppy waters.

Copyright 2022. Article was made possible by site supporter Jeremy Bowler.

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