Running a small business involves risk. It is the bane of any entrepreneur to manage that risk and determine how much is too much.
The task can sometimes feel daunting when faced with a difficult choice. However, despite the difficulty here are six ways to help manage risk and uncertainty.
If you are new to business or a field of business it can help to purchase an existing business. This does not have to be a franchise, but they definitely count. Getting a loan to buy a business could be a good way to mitigate start-up risks. Instead of burning through your life savings you can get a loan. These can sometimes have strict guidelines so be sure to do your research.
Going to a venture capitalist and asking for help can be overwhelming. Although, aside from their money their expertise can be a huge asset. They can help steer the business away from pitfalls, solve problems, and offer new solutions. Getting investors can greatly diminish potential risks.
This should go without saying, but research and planning are integral parts. As a small business owner, it is important to stay educated. Whether it is researching vendors, processes, or markets research is key. Without proper research, it is extremely hard to create a plan. The longer you stay without a well-researched plan the longer you risk the business.
Avoid the Long-Term
Avoid commitments that are long term. For example, a small business that is still looking to get on its feet should not enter into a mortgage. In other words, rent a storefront at first. By avoiding these hefty commitments you can focus on your business and its growth. By renting over purchasing it can help reduce the initial start-up costs. This means that it will require less money to operate the business on a daily basis.
If you are looking to grow in a new field, market, or attract a new clientele you may want to consider testing. This is very closely linked to researching as it requires data to be collected to plan for business expansion. Testing is a little different because it can come from employees, customers, or other businesses. The risk involved with expansion can be lowered with sufficient testing.
Teaming up with another local business or ring can be a smart move. Typically these rings or partnerships help share the burden of marketing and advertising. This can help ease the pressure of marketing costs. Which in turn helps to diminish the risk involved with financial longevity.
Another good aspect of these partnerships is the association. Typically when a small business markets in conjunction with another they can pull from a new clientele base. This can greatly increase awareness of your product, business, or ideas.
Risk is everywhere, but that doesn't mean that you have to allow uncertainty in your business. These six tips can help lessen uncertainty and consequently lower the risk of running a business. Be sure to leverage credit, investors, technology, and other businesses daily.