There are multiple risks that we need to consider when we plan to start a small business. We should know that most small businesses don’t survive their fifth years. This is a sobering statistics, which can be caused by numerous factors, such as personal stress, strained relationship, ruined credit and other unspoken financial turmoil. It is important for new business owners to take steps to minimize inherent risks associated with start-ups. This should allow us to save a significant amount of heartache and headache down the road. There are things that we can do to minimize the risks associated with starting small businesses.
Define our unique Risks
It is quite easy to determine common risks, but our small businesses may have a number of unique risks that we need to consider. We can take out a piece of paper. We can do this electronically using computers or mobile devices, it will feel more real if we use pen and paper. We should make a list of possible risks that may affect our new company. Then make a second list based on the order of severity based on the first list. Then, identify unique risks from the second list that only affect companies in our industry.
Create proper Strategy to minimize risks
After identifying risks involved with our new business, we should look for ways to minimize them. As an example, we should be able to protect personal assets by avoid signing any personal guarantee on any of our business debt. This is particularly true if we run a partnership or sole proprietorship. Risks can also be mitigated by taking our liability and property insurance policies.
Make sure that the Small Business matches us
We will have a higher chance of success if the small business is a good fit for us. It means that we will have more knowledge, skills, training and experience to run the new business. When entering an industry, make sure that we are familiar with it. This should also allow us to gauge our qualities and strengths. When entering a new industry, it likely that we lack the necessary know-how. If we lack some of the expertise, it is a good idea to form business partnership that allows our business to become a complete unit. Moreover, it is important to make sure that our business matches our personality. If we don’t like food, it’s not a good idea to run a new restaurant. If we have problem selling products directly, we may need to focus on online marketing methods or other indirect means.
Become the primary expert
If we want to achieve success, it is important to make sure that we know how to run our business. It is a good thing if we have the formal education related to our industry. Our knowledge and expertise should be beyond the basic level. It is possible that even our best skill doesn’t really match the level needed to run a business, so we should invest time and money to study more. If possible, it’s important for us to get a mentor who can help us to run our business.