Four business risks to manage

From a competitor copying your brilliant business idea to coping with unforeseen circumstances, there are always risks your business will face in the journey. Find out how a little planning now could save you significant stress in the future.


Every industry will have different key risks. Agricultural businesses face extreme weather risks, retailers face changing buying behaviour, software companies battle with competitors mimicking their product features, music and creatives with plagiarism. There are, however some common risks to all businesses. 

Risk One. Theft of intellectual property (IP)

The reality for many small businesses is that IP protection is a low priority, but it's best to be aware of what you own and take steps to protect it.

To help defend your business:

  • Wait until you launch before you make your ideas public. If you discuss, publish, sell or demonstrate your invention or design in public before filing a patent or design registration application, it's harder to prove ownership and easier for someone else to copy you.
  • Use confidentiality agreements when discussing your business with any suppliers, employees or partners to signal the information is yours and discourage them from talking about what you're doing (even unintentionally). 
  • Document everything. If you are drawn into a legal battle, it will help if you have written and dated proof of everything relating to your ideas.
  • Have layers of information disclosure, with a one-page outline that summarises your idea, then provide more information as you gain confidence in the person you're talking to.

The main types of intellectual property are trademarks (a brand name or logo), designs (the appearance or shape of a product design), patents (typically a new product, process or material), plant variety rights (a new type of plant) and copyright (original work, such as paintings, songs, lyrics, writing and film).

Go to the IPONZ website for more information on each IP type and how to register.

Risk Two. Staff theft or fraud

It sounds counter-productive to be suspicious of staff, but it's best for everyone in your business if you remove the opportunity to lose product, time or ideas from your business. Some examples of dishonesty include taking products or materials, stealing time by either arriving late or being inefficient, claiming unwarranted costs and expenses, fraud, leaving and taking your ideas to a competitor or giving excessive discounts to friends and family. 

To help reduce these risks, consider:

  • Outlining what's considered theft in any employment agreement. For example, taking one piece of photocopy paper home may be okay but taking a ream of paper is probably not. 
  • Set credit card balances and limit who receives a card or can authorise ordering products and reduce cash handling by asking customers to pay online or with mobile options. 
  • Require two people to sign product in and out of inventory management systems, and set up stock control software and systems to track all products.

Risk Three. Customer fraud 

Customer payments fraud is simply any customer deception that leaves you out of pocket, such as credit card fraud, scamming, phishing or identity theft (they pretend to be a customer or supplier).

Tips for preventing customer payments fraud include:

  • Perform credit and security checks on any credit you offer to other businesses and don't forget to check the debt history of the owners.
  • Request advance payments or deposits before commencing work to cover your direct costs. If it's possible and relevant, ask for progress payments regularly so you're being paid as you go.
  • Avoid employees selling to friends and family (who could be receiving large unauthorised discounts).
  • Educate staff on common fraud techniques and how they can spot them. These include a customer having 'forgot' their photo ID so you cannot check their card details or buying a small amount of product with cash (to trust them) then buying a large volume with a stolen credit card. 
  • Allow only a select few employees to accept payments from customers, and regularly change these employees, so it's not the same person each time.

Risk Four. Theft of intellectual assets

Intellectual assets are things that you can't always protect legally because it's too complex or too expensive. For example, it could be a relationship with a client, knowing customer buying cycles, or the time you've spent understanding a client's needs. This kind of "trade secret" information is hard to protect but a valuable asset all the same.

Major risk businesses face is the leaking of these intangible assets, with the primary sources of those leaks being customers, suppliers or employees. The most common is when employees leave and take client information, ideas, processes, ways of doing business, and personal relationships with them. It’s almost impossible to unbolt this knowledge from an employee.

Ways to minimise these risks include creating Non-Disclosure Agreements (NDA's) and Confidentiality Agreements that employees must sign, so they acknowledge that the information is yours and not theirs. These agreements should include what information is confidential and not to divulge that information to anyone.

Next steps

  • To manage any potential risk, take proactive steps to protect your business before a loss occurs. 
  • Speak with other business owners or contact your industry support group to learn how they safeguard their businesses against different types of fraud, theft and dishonesty.
  • Consider hiring external help to audit the risks in your business and provide solutions.
  • Work with a lawyer to draft the legal agreements you'll need.

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