The Importance of Good Bones: Managing Risk in Your Business
Running a business can be an incredibly rewarding experience, but it also comes with a significant degree of risk. From financial uncertainty to reputational damage, entrepreneurs must have a plan in place to manage risks effectively. One strategy that business owners can employ is to focus on developing a company with ‘good bones.’
What are Good Bones?
In the context of a business, having ‘good bones’ refers to having a strong foundation that can withstand challenges and stress. This foundation includes things like a solid financial base, robust processes and procedures, and a strong company culture.
Why Good Bones are Vital for Managing Risk
When a business has good bones, it is better equipped to handle risks that may arise. For example, suppose a company has a solid financial base with well-managed cash flow and reserves set aside for emergencies. In that case, it will be better able to withstand financial strain, such as a slowdown in sales or unexpected expenses.
Similarly, a company that has robust processes and procedures in place is better equipped to handle risks related to compliance or unforeseen events. By having a set plan for how to address these situations, the company can respond more quickly and efficiently, minimizing damage to its reputation or bottom line.
Finally, a business with a strong company culture is better equipped to manage risks related to employee turnover or low morale. Companies with strong cultures tend to have more dedicated, engaged employees who are less likely to leave, reducing the risk of instability.
Examples of Good Bones in Action
One excellent example of a company with good bones is Patagonia. The outdoor clothing company is known for its commitment to sustainability and ethical manufacturing practices. This dedication to its values has helped build a strong brand, decrease the risk of reputational damage, and increase customer loyalty.
Another example is Amazon, which has built a robust logistics and supply chain system that allows for fast and reliable delivery. This infrastructure has helped the company weather supply chain disruptions, such as those caused by the COVID-19 pandemic.
Conclusion
Managing risk is an essential aspect of running a successful business. While there is no way to eliminate all risk, focusing on developing a strong foundation with ‘good bones’ can help mitigate these risks and ensure the company is better equipped to handle challenges that may arise. By prioritizing financial stability, robust processes and procedures, and a strong company culture, entrepreneurs can build businesses that are better suited to handle the ups and downs of the marketplace.
