Entrepreneurs reveal how they are minimising risk while also seeking to grow their businesses
Dan Matthews – Business Journalist:
Risk is a reality for any successful company but you can take steps to mitigate potential problems. For example, by reducing your exposure to exchange rate volatility, spreading your customer base, and controlling your cash flow. Here are some examples of successful businesses doing all they can to contain risk in their business strategies.
Matthew Rice – Managing Director, Emma Bridgewater:
I don’t think you should grow your business just for the hell of it during a recession because I think that there is a likelihood of increasing your exposure to risk and I think what a recession is to do with is managing risk.
Aamir Ahmad – Managing Director, Dwell Furniture:
Focus very, very much on what makes somebody buy from you rather than anybody else and really get into the mind of the consumer. Understand why people buy from you and not somebody else then you should communicate that out to other people.
Jack Scott – Chairman, Jascots Wine Merchants:
Better value. That’s what it’s all about in 2009.
I think most of the risks that we have are to do with our own internal issues about cash management, about launching new products, about currency fluctuation is certainly a risk, is certainly an area of concern for us.
There is no point working eighteen hours a day and churning out a product, whether it’s wine or any other product, and not keep your eye on the absolute fundamentals, which is your…the strength of the pound as an importer or the strength of the pound as an exporter.
Most suppliers won’t give you a fixed exchange rate for any length of time. It’s difficult for them to hedge and especially if they’re exporting suppliers, you’re talking about them hedging dollar to sterling and that’s something that they really aren’t going to be very interested in.
What’s extraordinary about the situation now is that it’s so fast that this fall, and obviously we’ve had a second wave of the crash of sterling, it dropped to 101.93 just before new year’s eve and wow that’s really frightening as an importer. Obviously the dollar has come off from about 2 gone down to, I think it’s 1.36 or thereabouts today. These are massive swings, massive cycles and it’s very, very scary.
What we’ve had to do is to go out and investigate the instruments that we can use to be able to hedge that risk for ourselves.
I think the biggest change is keeping cash in the business. We’ve always been aware of that as an absolute necessity but it’s become much more extreme now.
I think actually in some ways the business environment seems much worse from the outside than it does from the inside. If you’re a small business, particularly, there is a lot more that you can do internally to fix your own problems.
There’s always ways to spend money and I think one’s got to, all the time, hold back and be conservative about that. Not get the new telephone system, you know, only get things that are going to actually bring money into the business.
Do not bury your head in the sand. Do not sit on this. Do something, be brave, do it now. You may make mistakes but I would suggest a lack of dynamism in your decision-making probably the biggest mistake any manager or any director, board of directors could make now. You’ve got to be brave and get on with it.