carl12
Jr. Member
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Posts: 68
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« Reply #1 on: January 28, 2010, 07:14:53 AM » |
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Product liability - every manufacturer faces the risk that his or her offering might be somehow defective or might be abused and the use of the product might then result in damage or loss to the user. This could result in a damages claim against the manufacturer;
Staff liabilities – non-productive staff is extremely difficult to get rid of. Inflexible labour laws both here and in South Africa cause severe problems for the employers. Non- productive staff obviously cost money from which very little return is earned. They might also lower the work ethic of an entire workforce. Other staff liabilities could be due to high turnover as a result of illness. Whilst staff are training for the job, money is being spent on their salaries as well as on associated costs, rental space, electricity, water and telephone connections and charges, to name but a few;
Slow payers are a huge concern, especially in the present climate. A businessman or woman who uses his or her bankers to fund the overheads whilst the clients are slow to pay for services or goods is in effect paying for the service or goods himself as inflation makes the value of the service or goods depreciate. If the trend continues for long enough business distress and closure is the result;
Breakages in the production line, often unplanned, are a source of risk as these outages can be expensive both in terms of direct costs and also expensive in those deadlines might be missed, resulting in a loss of custom;
Service provider risk. Take an erratic electricity supplier, for instance. Some industries are highly dependent upon electricity. Take the electricity away for a few hours and as in the above example, deadlines and clients might be missed and lost.; and
Risk of non-specialisation, for want of a better description. A supplier that dabbles in any fee earning activity that is possible to achieve, will end up costing too much money as the business would take too much time per project as it would constantly be doing new things, thus having to learn the ropes and fix mistakes. These overheads could exceed the fees and result in distress.
Apart from the above, there really are numerous risks associated with being in business. However, as a predator has to hunt, so a businessperson has to do business to survive.
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