It should have been fun to run a business and profit from it. Business is still a great way for some entrepreneurs to create a legacy and profit from a system larger than one person. Yet, business has its risks. Whole you can work with some risks and mitigate them; some others are beyond our control. It’s the kind of risks that we can control what business owners have to think about.
Almost every aspect of running a business flirts with risk and it does you well when you know how to deal with those risks. Here are some ways you can eliminate some common risks while running your business:
The risk of capital
Most business owners are under the impression that you’d need money to start and run a business. The fact: you don’t. Many businesses are started without a shilling on the table and all of that scaling, growth, and expansion that comes to a successful business is attributed to profits and smart reinvestment strategies. The rush for Venture Capitalism, the perceived need for capital, and the apparent hunger for cash to grow your business is just a result of years of brainwashing by business literature.
Starting a business “after” you are presented with truckloads of cash isn’t fun at all. In fact, it’s just another way of working for someone else instead of getting yourself a job. Why should you start a business and help make others (investors, lenders, venture capitalists) make all the money?
The risk of capital exists because your need capital exists. Get off the rut of having to fund your business using external sources. Put the risk on your shoulders because you are reliable and competent at least.
The risk of hiring full-time staff
One of the most expensive sets of payouts you’ll have to make each month is salaries and other disbursements made to your employees. While some businesses do need full-time staff and you might as well call those salaries and disbursements as “investments”, not all businesses need full-time staff.
The need to hire people gets you into a “leverage” mode. Traditional businesses could leverage by hiring more help. Your business, if it’s a possibility, can leverage using freelancers, part-time associates, telecommuters, and consultants. For all of the work that can be done on a computer, you’d never need to have resources full-time unless the workload demands such an arrangement,
Hiring full-time staff does not happen without risks: you can lose precious time training them only to see them leave the company; appropriation of intellectual property, the risk of employees idle time, the risk of expanding office space and staff only to face a “drought” situation when it comes to customers, sales, or projects.
The risk of competition
Ideally, competition is good. The presence of competitors in a marketplace already tells you that you can make money. Yet, many businesses fall for the “race”. While you look for expanding your market share and make customers choose you over competitors, you risk getting into “price wars”. Your business also stands to face the risk of competition devaluing your product or brand. How do you work your way out of your competition’s tight grip over your chances of success?
Ignore your competition; make your own road. Think ahead to innovate. Incorporate features or provide benefits to customers that your competitors will have to struggle to keep up with your competitive advantage. Serve customers better than others, price yourself higher but justify that price many times over.
The risk of Malice and security
All businesses are vulnerable. The need for physical security for businesses has been steadily growing and that explains the widespread installment and use of Surveillance equipment. A report from Rncos has numbers to show how the CCTV and surveillance systems market has been growing: the global surveillance market is poised to reach US $23.5 billion by the end of 2014 while growing at 20.5% CAGR.
What might explain that kind of growth? The National Retail Federation states that businesses report merchandise loss of about $33.5 billion. Over 35% of these losses are due to shoplifting and roughly 43% are attributed to employee theft.
Businesses face the risk of employees and customers who choose to steal items off the rack (for retail stores and similar businesses). Other risks could be misappropriation of funds, transactions that go void or “below the table”, data theft, internal malicious attacks on staff and on business assets, etc.
Installation of surveillance cameras or complete surveillance and monitoring systems puts this sort of physical and malicious risk in its place.
The risk of risk
For most other things where risk is expected to be, there’s insurance. According to Bankrate.com, there are lots of risks involved in business that most business owners don’t even realize. Hire an insurance expert and find ways to cover all bases as far as insurance is concerned. All of your business assets (including yourself, your staff, partners, and other key people) should be insured.
Also go specific and not broad. If your brick-and-mortar business also has an ecommerce site, what kind of insurance covers the loss due to hosting issues or due to failure in payment processing? Make sure you create separate business entities removing yourself from the equation, give yourself a way out, and watch over your business like a hawk.
You get the drift, don’t you?
Running a business is already challenging. Risks that you can eliminate, mitigate or reduce are the last odd balls you need to sort while focusing on company growth and business success. From the start, look for low-risk initiatives or take up calculated risks that you can work on if things don’t work out as planned.
Just because great things are achieved by taking huge risks, it doesn’t mean that you risk losing your shirt every time.
How do you manage risks in your business? What do you specifically do to reduce or remove risks from your business? Share your ideas and thoughts below. We’d love to know how you run your business.
Note: Brian Zeng is associated with CCTVHotDeals a leading e-commerce company in the surveillance system. He is a writer for CCTVHotDeals and has many years of experience partnering with clients to build their business through development and implementation of track-proven Internet marketing strategies. Follow him on Google+.