Business risks you have to avoid

Managing a business requires hard work that can get customers reward, income and satisfaction. Profit is the ultimate goal, but the business risk can prevent you from achieving these goals.
As you approach risk management, you can take certain actions.

Business risks
Financial Risk
This business risk may include credit reached to customers or your own company's money load. Business rate changes can also be a threat.
Making changes to your business plan will help you avoid harming cash flow or building an unexpected loss. Keep stocks to a minimum and produce a plan that will start reducing that debt load as soon as possible. If you rely on all your revenue from one or two clients, your economic risk could be significant if one or both no longer practice your services. Start marketing your services to increase your base so the loss of one won't destroy your bottom line.

Reputation Risk
There has always been the risk that an unhappy customer, product failure, negative press or lawsuit can negatively affect a company's trademark reputation. Social media has improved the speed and reach of reputation risk. Just one negative tweet or bad review can reduce your consumer following and make revenue to fall.
To prepare for this risk, support reputation management strategies to constantly monitor what others are telling about the business online and offline. Be prepared to answer those comments and help direct any concerns quickly. Keep quality top of mind to avoid claims and product failures that can also hurt your company's reputation.

Operational Risk
This business risk can occur internally, externally or involve a mixture of circumstances. Something could unexpectedly happen that causes you to lose business continuity.
That unexpected event could be a natural disaster or fire that damages or destroys your physical business. Or, it can involve a server interruption created by technical difficulties, people, or power cut. Many operational risks are also people-related. An employee might make mistakes that cost time and money.
Whether it's a somebody or process failure, these operational risks can negatively affect your business in terms of money, time and reputation. Address each of these possible operational risks within education and a business succession plan. Both tactics provide a way to think about what could go wrong and build a backup system or proactive steps to ensure actions aren't affected.
For example, more businesses are using cloud storage to protect company data and rely on remote team members to maintain operations. Automating more processes also helps to reduce people failures.

Competition Risk
While a business may be informed that there is always some competition in their industry, it's simple to drop out on what companies are offering that may appeal to your customers.
In this case, the business risk means a company leader becoming so comfortable with their success and the status quo that they don't look for ways to pivot or make regular improvements. The increasing engagement combined with an unwillingness to change may result in a loss of customers.
Enterprise risk management involves a company must regularly reassess their production, refine their strategy, and have safe, interactive connections with their audience and customers. Additionally, it's important to have an eye on the competition by constantly researching how they use online and social media channels.

The most common business risks

Running a business demands hard work, which can get the rewards of customers, income and satisfaction. While profit is the ultimate goal, the business risk can prevent you from reaching the goals you set.

When it approaches to risk management, there are certain actions you can take.

Economic Risk
The economy is continually changing as the markets fluctuate. Some good changes are great for the economy, which leads to booming purchase situations, while bad events can decrease traffic. It's essential to follow changes and trends to potentially recognise and plan for an economic downturn.

To prevent financial risk, save as many funds as possible to have a steady cash flow. Also, operate with strong funds with low expenses within all economic periods as part of your business plan.

Compliance Risk
Business owners meet an excess of laws and regulations to comply with. For example, fresh data protection and payment processing compliance could affect how you manage certain aspects of your operation. Staying well versed in relevant laws from federal agencies like the Occupational Safety and Health Administration or the Environmental Protection Agency as well as state and local agencies can help minimize agreement risks.

If you rely on all your benefits from one or two clients, your financial risk could be important if one or both no longer use your services. Start marketing your services to diversify your base so the loss of one won't waste your bottom line.

Non-compliance may occur in important fines and penalties. Remain alert in tracking agreement by joining an enterprise organization, regularly reviewing government agency data and seeking assistance from experts who specialize in compliance.

Fraud and Security Risk
As more customers use online and mobile channels to share private data, there are also bigger chances for hacking. News stories about data breaches, identification theft and payment scam illustrate how this type of risk is increasing for companies.

Not only does this risk impact trust and reputation, but a business is also financially responsible for any data breaches or fraud. To produce effective business risk control, focus on security resolutions, fraud exposure tools and employee and customer learning about how to identify any possible issues.

What is triangulation?

Triangulation is a simplification measure to reduce the administrative and regulatory burden on traders and tax authorities. It is intended to reduce the administrative and compliance burden related to VAT registration and accounting. This simplification measure can only work if all three traders involved are registered for VAT in the European Union.

Triangulation involves two supplies of goods between three Value Added Tax (VAT) registered traders in three different Member States of the European Union (EU). For example, if a trader established in one Member State (MS1) sells goods to a trader established in another Member State (MS2). However, the goods are delivered to a trader in a third Member State (MS3).

Transactions involving more than three companies
The simplification measure can only work in a classic generalization situation. If more than three companies are involved (eg successive sales between companies located in Member State 2), a strictly legal position applies. In such cases registration may be requested in at least one other Member State, depending on the precise circumstances.

What is operating activity

Operating activities are the main activities that a company performs to gain profits. Those activities affect the cash flow getting in and out and determine the net profit of the company.

Some major operating actions for the company are sales, customer service, administration and marketing. These activities are part of the regular functioning of a company that affects its monthly, quarterly and annual income and earnings. They also give the majority of the cash flow and manage profitability.

The operating activities of a company are found in the business’ financial records especially the cash flow statement and the earnings statement.

The operating activities section in these reports is considered the most essential section since it provides cash flow data compared to the daily operations of the company and allows stakeholders to see the viability of the company. It also manages the business’ ability to pay its current charges such as labour costs and debt payment.

The operating activities that occur in income generation are:

• Cash receipts from sales
• Settlements of lawsuits and insurance claims
• Income received from the investment
• Supplier refunds
• Accounts receivables collection
• Sales of shares

The operating activities that occur in cash outflows are:

• Supplier payments
• Tax payments
• Refunds to customers
• Settlements of fines and lawsuits
• Interest to creditors
• Equipment purchase
• Interest payment on loans and dividends
• Employee payments

In the statement of money flows, the cash flow from those activities is placed in the operating activities section. They are centred on changes in the current assets and current liabilities and the net profit. Cash flow report also lists the cash flow from investing and financing actions.

Business ownership types

The first step for any entrepreneur is setting up a company that will be used to formally start on the business journey, but several new business owners struggle to know the best way to go forward. These are the most common ways to organize a business, from the simplest through the most complex.

The most popular business ownership types include:

Sole Proprietorship
A sole proprietorship is the most elementary form of business ownership, where there is one sole owner who is liable for the company. It is not a legal entity that separates the owner from the business, meaning that the owner is liable for all of the debts and responsibilities of the company on a particular level. In trade for that liability, the owner keeps all the profits earned from the company.

Partnership
Partnerships are business ownership where two or more people work as co-owners. There are two kinds of partnerships, which are General Partnerships and Limited partnerships, separated primarily by the liability coverage by the partners. In a general partnership, all partners of the company have unlimited liability in the company. For a limited partnership, at least one of the partners has limited liability, expecting they are not individually liable for the debts of the company.

Limited Liability Company
A form of company ownership that is taxed like a partnership but uses the advantages of limited liability like a corporation is a “limited liability company”. In comparison to a corporation, it is easier to prepare and does not get double taxation. While together getting more credibility than a partnership or sole proprietor when it comes to finding resources such as working funds. This form of ownership is normally reserved for a group of experts such as accountants, doctors and lawyers.

There are more business ownership types such as s corporation, franchise, co-operative and corporations.

Ways to get a merchant account

A merchant account is a special type of business bank account that allows your company to accept various types of payments, usually debit and credit card payments.

There are two ways to get a merchant account; both request a contract:

• Agree with a member bank that has a processing relationship with Visa and Mastercard.
• Have a contract with a member bank's authorized representative, such as an independent sales organization or member member service provider (ISO / MSP).

The agreement means that your business agrees to abide by the terms and conditions of card credit markets.

Once your merchant account is made, you're ready to start taking credit card payments. It can be as simple as logging in to a software product, entering customer payment information, and clicking the Get Payments button to process a transaction and deposit funds into your bank account, once you've reached a great merchant account provider.

Agency Company

An agency company is a company that has an agreement with an offshore company (principal) on the activities of an agent. The agency company itself is not established in Austria but earns income from the agency commission.

At all stages, the agency company is doing business on clients behalf who, under the terms of the agency agreement, can be a tax haven company. Business transactions are made through an Austrian company and the proceeds are credited to its bank account. After deduction of the commission, the amount of capital is transferred to the account of the real seller (eg EU company). Agency fees can be set at 2%, 5% or even more and are usually paid annually. The Austrian company will declare the commission received as taxable income in Austria.

Austria as a whole is not hostile to low tax territories and does not impose strict restrictions on doing business with tax havens. However, the jurisdictions which have signed double taxation treaties with Austria are preferred to agencies. For example, an agreement between a UAE company and an Austrian agent is subject to the Austrian tax treaty with the UAE.

Hong Kong Limited or Singapore Pte, like many other companies in jurisdictions other than tax, havens, are also good options for such structures. In any case, all agency structures should be covered by a thorough and detailed agency agreement.