5 Strategies to de-risk your business

Risk is part of doing business. But for those of us supplying to government or operating in regulated environments, risk itself often isn’t the real issue. It’s those blind spots – the hidden risks that quietly grow until they become cash flow shocks, compliance problems, disputes with key stakeholders, or even insolvency.

De-risking your business doesn’t have to be a giant job. Consider doing a handful of things consistently to maintain resilience and stay ahead of most risks:

• Timing equals optionality
• Diversify revenue streams
• Protect from customer insolvency and non-payment
• Stay current on compliance obligations
• Build relationships and structure

Regardless of where your business may be in its lifecycle, you can employ these strategies – if you haven’t already. 

1. Timing equals optionality

Support your cash flow management and budgeting through regular engagement with a trusted adviser, such as a bookkeeper, accountant or other trusted professional. Regular engagement with your trusted advisor will hopefully avoid false confidence. 

Every business needs to differentiate available cash from revenue and profit. Not identifying these differences can result in new cash receipts paying for old expenses and hiding losses on unprofitable goods or services.

The lesson is to always maintain diligence when the future work pipeline is promising but profitability is thin, costs are rising, or liabilities are accruing. 

Engaging more regularly with your trusted advisor shouldn’t make things more complex. It should make them more visible. And when leadership knows the business’ true position, decision-making becomes less reactive.

Practical actions:

• Review cash flow and budgets regularly (not just at year-end).
• Monitor margins and job costs in real time.
• Monitor cash reserves and maintain them at an acceptable level.
• Treat surprises as a signal to review processes, not as one-off events.
• Avoid the ‘we have always done it that way’ trap

2. Diversify revenue streams

Over-reliance on one or two major customers can make for a fragile business model, even if those customers are stable and long-standing. Contract changes, funding shifts, procurement panel renewals, or project delays can quickly create a gap that’s hard to fill.

This is especially the case for those who count government as a main client. Tender pipelines and contract cycles can be unpredictable, and contract terms may concentrate delivery and payment risk.

And remember, diversification isn’t about chasing everything. It’s about making sure your business can absorb change while staying stable.

Practical actions:

• Set internal targets for customer concentration (for example, a maximum percentage of revenue per customer).
• Build a pipeline across multiple agencies, programs, or markets.
• Avoid single-project dependence – plan overlap between contract end dates and new work.

3. Protect from customer insolvency and non-payment

Many businesses think of insolvency risk as something that happens ‘to other people’. In reality, one customer collapse or even a delayed payment pattern can affect your cash flow. De-risking here is about acknowledging that your customer’s financial health can become your risk. 

There are ways to reduce exposure to counterparty risk. Depending on your industry, this can include obtaining personal guarantees, trade credit insurance or registering security interests – via the Personal Property Securities Register (PPSR) – to strengthen your position if a customer enters some form of external administration. Whatever you do, protect your business in ways that are right for your size and model, and are practical.

Practical actions:

• Consider obtaining personal guarantees from customers as part of your trade credit policy.
• Consider whether trade credit insurance is appropriate for your model.
• Review whether a PPSR registration strategy is relevant for goods supplied.
• Set clear credit terms and enforce follow-up processes early.
• Where possible, negotiate milestone payments that match your cost profile.

4. Stay current on compliance obligations

Compliance risk has a big chance of becoming critical if you ignore it for too long. For example, let’s say you delay lodgements or reporting, then find a large tax liability when you finally catch up. At that point, options are limited and stress levels rise.

Staying up to date with statutory and contractual obligations supports better forecasting and reduces the risk of sudden liabilities. 

Also, demand for evidence of compliance with statutory obligations within the procurement process for large contracts is growing across most industries. That next big job may depend on your business’s compliance. Be proactive – not reactive.

Practical actions:

• Maintain a lodgement calendar for tax and statutory requirements.
• If you’re unsure about your ability to pay, engage early with relevant agencies to discuss payment arrangements.
• Treat compliance as a monthly habit, not an annual event.

5. Build relationships and structure

Many business risks don’t start as big problems. They start as misunderstandings, delayed payments, scope disputes, staffing issues, or operational bottlenecks. Then they escalate when communication breaks down. 

Good relationships and structure can create a business able to absorb shocks without breaking, and make decisions early enough to choose pathways. 

Strong stakeholder management (with customers, suppliers, and employees) helps resolve issues earlier and preserves the goodwill that makes negotiation possible when things get tight. This is especially important if you need payment arrangements, contract variations, or time to work through a disruption.

A working business structure is also important for reducing risk. For larger organisations, separating a trading entity from asset-holding entities or employing entities can reduce the chance that a problem in one part of the business endangers everything. Similarly, you might separate arms of the business based on the geographic region they’re trading from, given different state and territory legislation.

For growing businesses, looking at your structure before, during and after any material expansion can prevent compliance and restructuring costs from escalating later.

Practical actions:

• Invest in relationships before you need to rely on them.
• Ensure you have properly documented employment, customer and supplier agreements.
• Introduce basic controls, such as segregation of duties for approvals and payments.
• Review business structure when entering new markets, expanding rapidly, or taking on materially larger contracts.
• Protect your strategic advantage by registering intellectual property such as trademarks and business names.
• Review your contractual termination rights with suppliers in the event of supply chain failure.
• If you have concerns about a customer or supplier, consider doing a credit check.
• If succession planning is relevant, start early – years, not months, before an intended exit.

The takeaway: practical discipline creates resilience

De-risking isn’t a once-a-year exercise or a document that sits on a shelf. It’s a set of practical disciplines that strengthen decision-making. When done properly, de-risking protects cash flow and reduces the chance that a single issue becomes an enterprise-wide crisis.

For organisations working with government or operating under close scrutiny, these disciplines also support credibility. They show you’re managing your obligations, protecting public and stakeholder trust, and building a business that can perform sustainably over the long term.