Christy still works a 9-5 job and would like to open a local bakery. She has been baking since a child and spent summers helping with her Aunt’s cupcake shop. She has been employed as an analyst in some fashion for more than 20 years. The bakery would be her first time starting her own business. She would like to eventually transition from corporate employee to full time business owner in the next 2 years. She will not quit her current job until the profit from the bakery replaces her current income.
Christy is tired of working 40-50 hours a week. The business is meant to not only allow her to be involved in an industry that she loves but also to free up some of her time so she will not be responsible for baking. She will hire a team of employees to take care of the day to day operations.
Christy has done some research and has listed various risks on her risk register worksheet. The one risk that she would like to address affects her timeline for opening the shop. Going through the process of identifying risks, she asked herself if there are any tasks that others must do. Getting the necessary permits is one of the things she is dependent on.
And talking to other small business owners she has found that the turnaround time for getting various permits oftentimes is longer than what she has been told by the local city officials. She has found that there is a chance that although the city often says that permits are turned around in a month, it often takes a lot longer than that, sometimes as long as 3 months. This is something that Christy often thinks about and scares her.
Christy does know that the holiday season would probably bring in a large percentage of her yearly revenue, regardless of the year she opens, so she would want to be opened at least a month before Thanksgiving to optimize her profit.
So the impact and probability of this risk is fairly high. She needs to consider that when determining how she wants to respond.
- Accepting is not a good way to response. That would be too risky.
- Transferring the risk is not usually a good option for smaller business unless it’s something that can be insured inexpensively.
The remaining options are mitigate and avoid.
- Avoid is not possible because she has no control over how long the city will take and she can’t open shop without the permits.
- Mitigate seems to be the best option for Christy.
She mitigates by adding flexibility to her targeted open date. She will plan to have a longer turnaround time so that it reduces the chance of her not having the permit by her targeted open date but if she does get it sooner than later, she can still open shop. Therefore she will work towards starting the permit process in June to increase her chance of opening the shop by the end of September or beginning of October.
And although she sees how a delay in getting permits could impact her original timeline, she also knows that planning to start the permit process earlier means that she will have expenses and no corresponding revenue for months that she originally hadn’t planned for.
We will talk about risks to budget later but this shows that one risk can, and often will, impact both your timeline and budget.
To get more details and your copy of the risk register worksheet, click here. Please let me know if you have any specific questions about the timeline risk example.
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