P4 Unit 4 Business
TASK 4
For the business owner, the risks must be known and a strategy on how risks will be managed needs to be in place.
4.1 IDENTIFICATION OF RISKS
• Strategic risks
The risks of having other competitors entering the same market in a short time is high since the capital required is low and no stocks are required.
• Compliance risks
Laws are constantly changing and new regulations are always emerging which could:
• Hinder or change the operations
• Increase the costs of overheads
• Financial and operational risks
The cash flow of the business indicates the health the business. Since the operation of the business is based on services, the risks of having stocks of material are non-existent. Additionally, if a customer will not pay for the …show more content…
training camp, he/she will lose the deposit which will cover any expenses incurred.
The financial risks are:
• Not enough athletes attending the camps to cover fixed costs
• Interest rate on the bank loan increases
• Annual statutory company fees could increase
• Foreign exchange rates can affect the competitiveness (Chamber of Commerce of Metropolitan Montreal, n.d.)
• Health and safety risks
• There is a risk that athletes might get injured or have health complication issues during the training camp.
• There could be safety issues with the subcontracted facilities
4.2 RISK EVALUATION
The risk matrix will evaluate the business risks involved: Figure 10 Risk assessment Matrix (Adapted from (Smartsheet, 2017)
4.3 RISK MITIGATION
From the risk matrix some risks need to be addressed:
Risk Severity Mitigation
Change in foreign exchange rates Low No action
Increase in interest rates Medium No action
Unpaying customers Medium A deposit taken with each booking
New laws and regulations High Implement them quickly
Injured and sick athletes High Request a medical certificate from the athlete’s doctor confirming that he/she is fit for strenuous exercise
All coaches must be First aid certified
New competitors High Introduce innovative ideas during the end of the growth phase of the product life cycle
Safety risks High Regular H&S audits of the facilities
Low participation numbers Extreme Pricing must be kept competitive. Service must meet customer requirements. A bank overdraft can be taken in temporary financial losses
4.4 MONITORING AND REVIEWING
Since risks are dynamic and subject to change, a biannual review of the risks will be carried out.
TASK 5
Failure can be avoided by:
• Regular advice from a qualified accountant who would also take care of the financial audits, bookkeeping and financial reports are needed for the business to be legally compliant, efficient and effective which are required for the survival of the venture.
• Controls via strategic planning should be in place to monitor the business and its development. If business operations are deteriorating the situation and be corrected in good time.
• Performance can also be monitored by looking at the gap between what was budgeted and the actual budget (European Federation of Accountants, 2004).
• A risk management procedure should be in place to avoid any failures
• Marketing is vital for the survival of the business. In the case of start-ups, marketing should be used as a means of exposure and sufficient resources should be allocated to communicate what the business is about and what is being offered.
• Marketing should be carried out through the life cycle of the business especially at times when the business is suffering due to external events such as economic recession when any potential customers cut their expenditures.
• A well-structured website together with social media presence are important. Without social media updates, the business is lost to other competitors who are regularly using them to promote their business (Schaefer, 2017).
• By marketing the brand and continuously improving it, together with keeping an active social media network, the service and products remain competitive with other brands (Sweeney, 2011).
• Customers can be considered as the biggest asset and liability that a company has and should be heard, given assistance and answered within the shortest timeframe
possible.
For the business owner, the risks must be known and a strategy on how risks will be managed needs to be in place.
4.1 IDENTIFICATION OF RISKS
• Strategic risks
The risks of having other competitors entering the same market in a short time is high since the capital required is low and no stocks are required.
• Compliance risks
Laws are constantly changing and new regulations are always emerging which could:
• Hinder or change the operations
• Increase the costs of overheads
• Financial and operational risks
The cash flow of the business indicates the health the business. Since the operation of the business is based on services, the risks of having stocks of material are non-existent. Additionally, if a customer will not pay for the …show more content…
training camp, he/she will lose the deposit which will cover any expenses incurred.
The financial risks are:
• Not enough athletes attending the camps to cover fixed costs
• Interest rate on the bank loan increases
• Annual statutory company fees could increase
• Foreign exchange rates can affect the competitiveness (Chamber of Commerce of Metropolitan Montreal, n.d.)
• Health and safety risks
• There is a risk that athletes might get injured or have health complication issues during the training camp.
• There could be safety issues with the subcontracted facilities
4.2 RISK EVALUATION
The risk matrix will evaluate the business risks involved: Figure 10 Risk assessment Matrix (Adapted from (Smartsheet, 2017)
4.3 RISK MITIGATION
From the risk matrix some risks need to be addressed:
Risk Severity Mitigation
Change in foreign exchange rates Low No action
Increase in interest rates Medium No action
Unpaying customers Medium A deposit taken with each booking
New laws and regulations High Implement them quickly
Injured and sick athletes High Request a medical certificate from the athlete’s doctor confirming that he/she is fit for strenuous exercise
All coaches must be First aid certified
New competitors High Introduce innovative ideas during the end of the growth phase of the product life cycle
Safety risks High Regular H&S audits of the facilities
Low participation numbers Extreme Pricing must be kept competitive. Service must meet customer requirements. A bank overdraft can be taken in temporary financial losses
4.4 MONITORING AND REVIEWING
Since risks are dynamic and subject to change, a biannual review of the risks will be carried out.
TASK 5
Failure can be avoided by:
• Regular advice from a qualified accountant who would also take care of the financial audits, bookkeeping and financial reports are needed for the business to be legally compliant, efficient and effective which are required for the survival of the venture.
• Controls via strategic planning should be in place to monitor the business and its development. If business operations are deteriorating the situation and be corrected in good time.
• Performance can also be monitored by looking at the gap between what was budgeted and the actual budget (European Federation of Accountants, 2004).
• A risk management procedure should be in place to avoid any failures
• Marketing is vital for the survival of the business. In the case of start-ups, marketing should be used as a means of exposure and sufficient resources should be allocated to communicate what the business is about and what is being offered.
• Marketing should be carried out through the life cycle of the business especially at times when the business is suffering due to external events such as economic recession when any potential customers cut their expenditures.
• A well-structured website together with social media presence are important. Without social media updates, the business is lost to other competitors who are regularly using them to promote their business (Schaefer, 2017).
• By marketing the brand and continuously improving it, together with keeping an active social media network, the service and products remain competitive with other brands (Sweeney, 2011).
• Customers can be considered as the biggest asset and liability that a company has and should be heard, given assistance and answered within the shortest timeframe
possible.