How to Reduce the Risks Inherent in Entrepreneurship
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While it’s fun to start a business, it’s also risky. The main fear that holds people back from leaping into entrepreneurship is the risk involved with starting something new. However, some of these risks can be reduced or even eliminated. With the risks out of the way, you will be able to accomplish your goals in no time.
Business risk refers to a threat to the company’s ability to achieve its financial goals. In business, risk means that a company’s or an organization’s plans may not turn out as originally planned or that it may not meet its target or achieve its goals.
For startups and established businesses, the ability to identify risks is a key part of strategic business planning. Risks are identified through a number of ways. Strategies to identify these risks rely on comprehensively analyzing a company’s specific business activities. Most organizations face preventable, strategic and external threats that can be managed through acceptance, transfer, reduction, or elimination.
1. Analyze the sources that may trigger problems
2. Taking action
3. Involve your employees
4. Make a list of industry-specific risks
5. Create a record of the risks
Don’t Use Your Own Money
Financial loss is one of the biggest risks in entrepreneurship, especially the loss of personal savings. Not only is there a possibility of losing your money, but your losses could also affect your home and family. Even if your business plan works out, it will take a while to make back what you put into the start-up. For that reason, you should look for outside investors, who can help your business get its footing. These can be your friends or other small business investors.
Typically, most investors will ask for a cut of the profit or a return on their loan. However, you can also benefit from the resources and connections that your investors already have, and they might be able to open doors for you that you could not open alone.
Looking Into Franchising
To franchise, a business means that you will work with a trademarked corporation and benefit from the trademarked goods or services that your business provides. Many fast-food restaurants, for example, operate under a franchise, although your options are not limited to restaurants alone.
Franchises carry fewer risks than starting a business from scratch. This is because the brand itself is already well known, and you will only be contributing to the reputation instead of building it up from the ground. However, you still get to use your entrepreneurial spirit as you find ways to make the franchise profitable through a sales strategy in your location.
Especially in the early days of your business or product development, your employees could make or break your success. While it might be easier to bring your best friend on the project with you, it’s important to know what employee qualities to look for. Ideally, you would want employees who understand your vision and who can match your drive for success. As the employer, you also want employees who are not afraid to give suggestions that could help improve the business.
Becoming an entrepreneur is not the career path that everyone should take and no matter how great an entrepreneur you may be, you can never completely eliminate risk. It takes someone with dedication and creativity to work around the obstacles that turn so many away. However, once you overcome the main risks, you will be on that road to success.
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