Small TOBACCO MERCHANT ACCOUNT business risk management

Risk management is a relatively new term in general business. The ancient tools used for risk management include good consumer value, common sense as well as personal integrity. All these concepts are applicable to the different facets of assessing the risks involved in business and then mitigating it. The most commonly used ancient tool is common sense. This simply means utilising the common sense to pay attention to obvious circumstances and by using the knowledge and experience, making sound judgements and wise decisions. Most of the businesses, especially medium and small businesses, have minimal knowledge and experience to start with.

There are a few indicators which need to be caught by businesses. These will help in raising awareness on risk.

Quick and simple financial indicators:

-       Cast flow – Usually, the business health has been looked in factors such as amortisation and depreciation, taxes, earnings before the interest. Though this is a good indicator of the business health, the best indicator is cash flow.

-       Accounts receivable – Factors such as how much cast is outstanding, for how long and by when.

-       COGS or Cost of Goods Sold – If a trader fails to know the cost of the service or product, and then it will be difficult to understand the margins. This implies that the trader could face cash flow nuisances. Moreover, an employee’s performance should also be considered as this relates to the efficiency in the output of the service or product.

-       Expenses – It is necessary to know all details of the incurred expenses apart from COGS. One should keep in mind that extraneous expenses also have an impact of cash flow.

Quick and simple external indicators

-       Consumer satisfaction – A trader has to know what the consumers think about their services of products.

-       Market and competition – One has to know well about the market as well as their competitors. It is also necessary to review the SWOT analysis at a regular basis.

-       Access to funds – a trader needs to take out time about the happenings in the bank and the relationship with the bank. It is vital to find out how new ideas are being funded.

The existence of risk in a business cannot be eliminated. It is important for businesses to evaluate the happenings, understand the risks associated with their business in order to make sound decisions and improve business revenues and operation. By investing the required time to have a good look at the important external as well as internal indicators will help in accessing details. Also, it aids in constructing a bigger picture for making good judgements and decisions. In the case of complex businesses where the costs are justifiable, then appropriate software tools prove to be useful. Hence, the most essential aspects with respect to management of risk are – knowledge: knowing the business well; experience – trusting personal experience as well as the experience of the board of directors or advisory board, and finally making sound judgements. Above all, use common sense, the good old business tool. Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.