As an SME owner, one of the many challenges is to balance risk against reward. There are those who are overly cautious, while many others will cheerfully take the plunge without fully taking into account all the potential pitfalls of their decision.

But awareness of the risks that could disrupt your business is crucial when it comes to growth and the future.

As Paul Anderson, assistant head of risk underwriting at Euler Hermes, says: “Failing to plan for a shock is common among businesses that have previously seen success. Just because you have done okay in the past doesn’t guarantee it will continue to be so in future. For example, the bigger you get, the more you will appear on competitors’ radar, which is a risk in itself.”

Victoria Keeling, direct and bank distribution underwriting manager at Euler Hermes, adds: “Everything comes back to knowing the market, knowing your obstacles and risks, then trying to prevent them.”

Here’s a series of steps that will help you avoid the common pitfalls…

1. Delegate as you grow and don’t try to do everything personally – far too many SME owners spread themselves too thin

2. Train staff to deputise if a key person is absent or leaves the business

3. Upgrade your recruitment practices to include background checks

Get clued up on emergency procedures

4. Ask your building owner for details of checks on fire or flood risk

5. Run a workshop to role-play what would happen in the event of a flood or fire – and appoint officers who are responsible for training and emergency procedures

6. Check that your IT systems are protected against the latest threats – cyber criminals and fraudsters are increasingly focusing on SMEs

7. Book your staff onto training courses, so they can recognise fraudulent attempts to obtain sensitive information, such as phishing attacks, and the dangers of using their own devices

Take stock and forecast

8. Audit your customers and check for signs of late payment, such as erratic or partial payments and only settling smaller invoices

9. Assess your market and track the performance of your competitors

10. Forecast your cash flow for the next 12 months

11. Insure against late or non-payment with trade credit insurance

Make it a yearly habit

12. Keep up to date with these steps and revise your risk assessment every 12 months as threats continually evolve