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Risk Management Issues
9-1Copyright © 2011 Nelson Education Ltd.
Minimize Unfortunate SurprisesMinimize Unfortunate Surprises
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Prepared byRon KnowlesAlgonquin College
& Jennifer Rouse BarbeauCanadore College
Chapter OverviewChapter 9 will: Help you plan first.
Good planning can help the entrepreneur avoid ugly and unpleasant surprises.
Demonstrate how to account for surprises. Help you anticipate potential problems and
minimize their effects.
9-2Copyright © 2011 Nelson Education Ltd.
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Learning OpportunitiesDevelop a Plan B to minimize the ill effects of
unfortunate surprises.Determine your insurance needs and costs.Draft a health and safety policy and action
plan.Develop a list of precautions that will help
minimize the opportunities for employee dishonesty.
Prepare a 12-month start-up checklist.
9-3Copyright © 2011 Nelson Education Ltd.
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Plan B Checklist
9-4
Advisors
Organization
Licenses/Permits
Location
Auto
Equipment
Fixtures
Supplies
Inventory
Advertising/ Promotion
Banking
Employees
Copyright © 2011 Nelson Education Ltd.
Calculating Insurance Needs
9-5
These risks can be covered by insurance:•Personal injury •Employment practices •Loss to the business caused by death or disability •Loss or damage of property•Loss of income resulting from interruption of business•Consequential losses•Auto
What type of business insurance will you need? Check out Box 9.4
These risks can be covered by insurance:•Personal injury •Employment practices •Loss to the business caused by death or disability •Loss or damage of property•Loss of income resulting from interruption of business•Consequential losses•Auto
What type of business insurance will you need? Check out Box 9.4
Copyright © 2011 Nelson Education Ltd.
What Insurance Will You Need?The type of insurance and The type of insurance and coverage needed depends on:coverage needed depends on:
• size of any potential loss• probability of loss• resources available• probability of lawsuits
9-6Copyright © 2011 Nelson Education Ltd.
Home-Based Business InsuranceAuto Insurance Auto Insurance for business purposes is a must.
3 basic types of Home Insurance Home Insurance policies are:Homeowner’s policy endorsement In-home business policy/programBusiness owners policy (BOP)
9-7Copyright © 2011 Nelson Education Ltd.
Occupational Health & Safety
9-8
Two basic levels of OHS legislation:Federal Provincial
OHS legislation outlines:Responsibilities of owners, supervisors, and workers
Copyright © 2011 Nelson Education Ltd.
Occupational Health & SafetyLegal Requirements
9-9
Legal requirements can be grouped intofour broad categories:
1. Government, employee and employer responsibilities
2. Joint Heath and Safety Committees (JHSC)
3. Workplace Hazardous Materials4. Due Diligence
Copyright © 2011 Nelson Education Ltd.
Employee Dishonesty
9-10
Cash register
vulnerability
Cash register
vulnerability
Cheque deceptionCheque
deception
ShopliftingShoplifting
Credit cardfraud
Credit cardfraud
Bookkeeping theft
Bookkeeping theft
Counterfeit money
Counterfeit money
BurglaryBurglaryRobberyRobbery
Fitting room theft
Fraudulent Refunds
Fraudulent Refunds
Copyright © 2011 Nelson Education Ltd.
Get Advice & Plan AheadSurprises await every entrepreneur.Surprises await every entrepreneur. Before you start your business
Find a small business guruEstablish an advisory boardNetwork for a mentor or advisor.
Remember, anyone can be part of your team.
Have a plan B. Plan ahead—get started on a stat-up
checklist.
9-11Copyright © 2011 Nelson Education Ltd.
Chapter 9 helps you manage risk & prepare Parts H, I & J of your business plan:
Financial SectionFinancial Section
9-12Copyright © 2011 Nelson Education Ltd.
Business Plan Business Plan Building Block
What operational goals and objectives do you want to achieve?
What risks and challenges does your business face, and how will you address each one?
Develop a start-up schedule beginning twelve months from the launch.
What are the major cash drains in your business?
9-13Copyright © 2011 Nelson Education Ltd.
Checklist for Your Business PlanYour Business Plan
What types of insurance and employee bonding will you have for your business?
Do you have a health and safety policy in place?
9-14Copyright © 2011 Nelson Education Ltd.
Checklist for Your Business PlanYour Business Plan
Risks & Offsetting ActionsYour Business Idea.
Answer Chapter 9 case study questions to learn:What are your Plan “B” solutions?What costly surprises might arise?What is your health and safety policy?How will you protect your business
against crime?
9-15Copyright © 2011 Nelson Education Ltd.
CaseStudy