Running a business as a sole business owner can be very rewarding. However, it does come with various risks and threats, especially when you are the sole driver of your business’s success. No matter what industry you work in, even the most optimistic entrepreneur should ensure that they’re prepared for worst-case scenarios. It is important to be clear on what threats your business may face, this will allow you to create a plan to make sure that your business is future-proofed.
Potential risks and threats:
Stress and Burnout as the sole business ownerA significant risk of running a business as a sole business owner is the stress and risk of burnout. Due to being the sole decision-maker of the business, you may feel a great amount of pressure and responsibility, which can lead to long working hours and potential stagnation within the business.
How to mitigate this risk
Bringing in a skilled management team of key members of staff can help to alleviate the pressure of feeling like every decision falls on you. By then also giving these key staff members some stake in the ownership, it will also help these employees to have an owner mindset and share some of the load. This may help you to delegate tasks and get other input into crucial business decisions. Not only does this help with eliminating the pressure, but it can also drive business growth due to having more input on decisions.
Business Continuity Have you considered what would happen if you suddenly couldn’t work due to illness, injury, or any other unforeseen circumstance? The risk of business interruption is significantly higher as a sole business owner, and without a backup plan or support system, your business operations could come to a halt.
How to mitigate this risk
Developing a contingency plan ensures that you are prepared should anything happen to you. This could include cross training some employees to ensure that they can step in where necessary. Similarly, to the above point, having a management team of key employees will ensure that there are some established leaders ready to take action.
Having them already in an employee share scheme, will assist and facilitate them to step up to the plate and continue the business forward when you’re not there. It is advisable to ensure that these key employees are equipped with any processes and responsibilities, so it is important to ensure that these are documented.
Business Future-proofingIs your business equipped to thrive in the face of changing markets, technologies, and customer needs? For many sole business owners, it can be challenging to stay ahead of these evolving dynamics. Future-proofing your business is essential to its long-term success.
How to mitigate this risk
To future-proof your SME, invest in ongoing market research and trend analysis. Adapt your business model as needed and embrace technology that can streamline operations and improve efficiency. Ensure you always have a focus on innovation. Bring in fresh perspectives, and create the time and space for innovation, by allowing employees to have some share in the ownership – to have some new dynamics and perspectives on ensuring the business is future proofed.
Loss of key staff Losing key employees can have a huge negative impact on a business, including decreased productivity, increased costs, and a potential loss of clients or customers.
How to mitigate this risk
- A key strategy for mitigating the risks of running a business as a sole owner is to consider bringing key employees on board with some sort of equity stake. Bringing in key employees into share ownership and incentivising them can help to boost business growth and can also generate a higher productivity level and increased morale.
- When hiring employees, ensure that they align with your company's mission and values. Provide clear job descriptions and training to empower them to excel in their roles. Effective delegation can allow you to focus on strategic decision-making while your employees handle day-to-day operations. An incentive to help combat low staff retention is to bring some employees onboard via an employee share plan, this gives them a stake in the business and will spur productivity and increase loyalty.
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As always, we recommend speaking to your advisors about the best steps before making any changes. If you would like to discuss how to future proof your business through employee share ownership please get in touch. Our tax advisors are skilled in such areas and can navigate the process smoothly.
For more information on how we can help you and your business, please contact us via info@oldfieldadvisory.com or call 02476673160 for support and advice. Let’s work together to grow and strengthen your business.
Please note: This article is provided for information only and was correct as at time of writing (07/11/23). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance. No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.
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