Risk Management Issues 9-1Copyright © 2011 Nelson Education Ltd. Minimize Unfortunate Surprises chapter 99 Prepared by Ron Knowles Algonquin College & Jennifer Rouse Barbeau Canadore College

Chapter Overview Chapter 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. chapter 99

Learning Opportunities  Develop 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. chapter 99

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 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 Insurance Auto Insurance Auto Insurance for business purposes is a must. Home Insurance 3 basic types of Home Insurance policies are:  Homeowner’s policy endorsement  In-home business policy/program  Business 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 & Safety Legal Requirements 9-9 Legal requirements can be grouped into four broad categories: 1.Government, employee and employer responsibilities 2.Joint Heath and Safety Committees (JHSC) 3.Workplace Hazardous Materials 4.Due Diligence Copyright © 2011 Nelson Education Ltd.

Employee Dishonesty 9-10 Cash register vulnerability Cheque deception Shoplifting Credit card fraud Credit card fraud Bookkeeping theft Counterfeit money Burglary Robbery Fitting room theft Fraudulent Refunds Copyright © 2011 Nelson Education Ltd.

Get Advice & Plan Ahead Surprises await every entrepreneur.   Before you start your business  Find a small business guru  Establish an advisory board  Network 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 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. Your Business Plan Checklist for Your 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. Your Business Plan Checklist for Your Business Plan

Risks & Offsetting Actions Your 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. Case Study