Big Disaster
The oil spill in the Gulf of Mexico has been declared the biggest environmental disaster in US history. While British Petroleum, one of the largest companies in the world could learn a few lessons from the catastrophe, small business should also take note.
There is an important lesson to be learned by small business owners from the BP disaster – manage your risks or face potential collapse.
This lesson relates to a factor that, in my opinion, has been been widely overlooked. While the US government, BP, the media and the public quite rightly focus on the environmental fallout and claims that BP may have compromised safety by cutting corners, one thing that has been barely mentioned is the fact the the giant oil company had no contingency plan for an oil leak occurring at the depth they were drilling.
Each time BP has attempted to cap the well, or at least partially stem the flow, they have claimed that the technique they are using has been previously successful in shallower waters but is untested at the depth of the leaking wellhead in the Gulf.
What this means is that BP has not managed their risks. They had no real contingency plan in place for a leak in deep water and the price they paid – billions of dollars wiped off the company’s value and a massive clean up bill – has been immense.
So how does this relate to small business?
Small Business Lesson
BP is a giant in the oil industry. They operate thousands of wells, drilling units, tankers etc all around the world. The fact that the company has suffered greatly both financially and in reputation from the failure of a single piece of equipment, is something that small business owners should stand up and take notice of.
Failing to mange your risks could prove fatal to your business.
All business are exposed to risks no matter what their size. As a small business owner you will be exposed to many different risks – some of which you may not even be aware of.
If your cash flow was negative, or if an employee sued you after an accident on the job, or if a vital piece of equipment failed, would your business survive? Or, unlike BP, do you identify and manage all your risks?
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