What is your attitude to risk – No, know or nose?



Author: Mike Watts, Associate Director, SouthWestfd

Whilst I acknowledge that some extremely successful business owners seem to ‘smell’ success, the preferred approach, however, is to do your homework, thinking through the worst case, best case and expected scenarios, understanding the financial and practical implications of each, and not forgetting to compare with ‘do nothing’, i.e. what if your competitors take the risk and you don’t?

The recession has changed the SMEs attitude to risk, less risk is now acceptable by our stakeholders, with the banks in the SME space having gone through the complete cycle.  Initially Bank Managers were provided with flexibility to make local decisions using their local experience and their ‘nose’, then the banks just said ‘no’, de-risking their position completely to the detriment of small businesses, finally ending up with the logical focus on knowledge, albeit my personal experience is that the process takes far too long.

By design, there are very few entrepreneurial accountants, our first reaction is to say no, but the good ones can be persuaded by logic and a contingency.  If you can persuade us, we can help you persuade your other stakeholders giving the project a greater likelihood of success.

It’s best to be on top of risk and assess what is best for your business.