Starting any kind of business, including an Accountancy Practice, can be a very worrying and stressful time.
- Will it work?
- Can you attract clients?
- What will you sell?
- How much should you charge?
- Why will clients buy from you?
- Have you met all the legal and regulatory obligations?
- Will you be able to pay the bills?
- What happens if it all goes wrong?
All too often the worry is focused on the ‘what ifs’; the things that could happen.
If you’re the type of person who sweats the small stuff (and there’s nothing wrong with that), then it may be worth applying some risks and issues management techniques to avoid sending yourself frantic with worry.
Let’s start with some definitions. Risks and issues are defined quite clearly in project management.
A risk is an uncertain event(s). Should such event(s) happen, they will have a material effect.
An issue is something which has already occurred.
Put simply issues need to be quickly sorted out whilst risks are something for another day as they may never happen. That said, it is worth carrying out a risk assessment and putting in place a risk mitigation plan, where appropriate, preventing risks (which haven’t happened) becoming issues.
Whenever you’re about to undertake a large task or project in your personal or professional life such as starting a new business or moving house, it’s worth sitting down and performing “a risk assessment”.
Start with a blank piece of paper and do a brain dump of all the things that could occur, good or bad, however trivial or major.
Put them into a list and add two extra columns:
- The likelihood or probability of the risk occurring
- The impact if the risk does happen
Mark each item identified with
against both likelihood and impact.
So you’ll end up with a grid something like this:
Risk assessment register for project ABC
Obviously, your H, M and L’s will have a different profile.
Once you have this, sort the risks by likelihood with the H’s at the top.
If you have any double H’s (high likelihood of happening and high impact if it does happen), then you need to get onto a risk mitigation strategy right away. Mind you, there should be a risk mitigation for all risks; the extent of the plan is dictated by the assessment of the risk.
But before we move onto risk mitigation let’s just take a moment to assess the risks.
The risk assessment register should bring focus and clarity to what is important to the project or major task being undertaken. If you’ve many L, L risks (low likelihood, low impact) then you can ease off the worry pedal. That said, nothing should be ignored completely.
Your risk register should be reviewed on a regular basis during the timeline of your project as events (both internal and external) may change your risk assessment. Things can also change from a risk (uncertain event) to an issue (something which has already happened). However, the risk mitigation plan should reduce this happening as well as giving you a pre-thought-out way of handling it.
Risk Mitigation Plan
There are many ways that a risk can be managed by taking various actions. The following represents a few of them.
Avoiding action may mean a change needs to be made to your project so that the risk is removed and the uncertain event is never able to occur. Avoiding actions reduce the impact or likelihood of the risk happening.
A mitigation action needs to be devised and taken to reduce the likelihood or impact of the risk.
A fall-back action, or contingency plan, would be taken if the risk occurs, i.e. it becomes an issue. Such an action does not affect the likelihood of the risk occurring or the impact if it does.
A transfer mitigation can be, for example, taking out insurance to reduce the financial impact if the risk occurs.
Here you would make a conscious decision to accept the risk and do nothing.
Monitoring the situation very carefully ensures that the risk does not venture beyond an acceptable level of profitability or impact.
So, having identified the risks, assessed the likelihood of them happening, the impact if they do, as well as developing a mitigation plan should give you the peace of mind meaning that you can stay calm during your project; especially if it’s your business launch.
Finally, it’s always worth mentioning the six P’s….
Proper Prior Planning Prevents Poor Performance