Chapter 1: Identifying Risks in the Construction & Contracting Industry
Part 1: What Is Business Risk?
"Risk" is a common word in most people's vocabulary, and as a small business entrepreneur, you may think about risk more than most. But what, exactly, is "business risk?"
Generally speaking, risk is the potential for a negative outcome. When talking about a business, most negative outcomes can be distilled into one thing: monetary loss. So a business risk is the potential for your business to lose money.
Every business decision you make — even the "no-brainers" — has some potential to result in a loss. Obviously, some actions are riskier than others. And some risks can't be entirely avoided. Why? Because you can't keep the weather from damaging a fledgling project. Or those kids from vandalizing your business vehicles.
Now, there are ways to reduce your business's level of risk with risk mitigation techniques and small business insurance. We call this "risk management," and we'll go into more detail on this topic a little later.
But for now, you can't manage your business's risks until you understand what they are. Keep reading to learn more.
Next: Part 2: Identifying Your Contracting Business's Risks
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