How to Think About and Reduce Risk When Starting Your Own Business

How to Think About and Reduce Risk When Starting Your Own Business

I understand that many of you are in startup mode or contemplating whether to become an entrepreneur. My goal is to encourage waverers to start their own business and mentor those on their way to becoming millionaires.

This article will provide examples of the risks I took and how I overcame them as presented in my book, "Raise the Bar Change the Game." You can benefit from real-world examples. Let’s start with four questions to help you think about risk before you launch.

What’s your tolerance for risk?

Risk is a significant barrier for budding entrepreneurs and investors. A bank or fund manager will always ask about your appetite for risk. If your risk tolerance is low, don’t start a business because most days will involve some risk.

What’s your business idea?

To start a company, you need a business idea. Don’t get stuck trying to find a new and disruptive idea. Stick with a business model that involves something you are passionate about and do it better than anyone else.

How will you fund your business in the beginning?

In the early days, you may have insufficient money and a comfortable job with a regular income. Check your partner’s appetite for risk, as their support is crucial. Surround yourself with positive people and find ways to secure financing, such as borrowing from friends, family, or using credit cards. Get your customers to pay you before you have to pay your suppliers.

What’s your plan B?

Have a risk mindset and be prepared for failure. Develop a plan B and be willing to change your strategy if needed. Consider how you’ll feel if you don’t move forward and recognize that failure is an opportunity to learn.

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To reduce the risk of starting your own business, write a one-page business plan. Use it as a framework for making a risk assessment against every business goal and strategically mitigate them. Hire the best people who are more intelligent and clever than you. Focus on profits and cash above all, as profits are important but cash is king. Stay focused on your vision and keep in touch with what the competition is doing.

You will face many challenges during the life cycle of your company, but with a high appetite for risk and self-belief, you can become a market leader.

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