How Can Entrepreneurs Minimize Business Risks?
Whether your business is a startup, medium-sized, or a global enterprise, it cannot be free of risks. Some risks are small that they can only cause a few losses while others are so dangerous that they can shut down an entire venture. Other risks can even be caused by your mistakes.
Because business risks are common and most of the time are unavoidable, seasoned business people have learned to minimize the exposure of their businesses to risks and minimize the damage the risks can do to their businesses. The tips you’ll find below are what professional entrepreneurs follow to keep their business running even through tough times.
1. Get an insurance
Fires, natural disasters, or even bankruptcies are real threats that can ruin your business regardless of how intricate your plans are. By getting insurance, you can rest easy at night knowing that your business has something to fall on in case things go south such as this pandemic we face.
2. Diversify your product list and services
In business, there will always be competition. You might wake up one day only to discover a competitor has made better products and provides services than you. This could then make your business obsolete taking away customer interest.
A business with diverse products and improving services keeps itself fresh on the market. This gives you an edge over your competitors.
3. Limit your business loans
Business loans are very tempting. Yes, they can give you capital to start and expand your venture but they can also drain your resources if you pick the wrong plan. Remember to choose a much more manageable loan with the least interest and only apply when you really need it.
4. Developing a solid business plan
As the famous expression says, “Failing to plan is planning to fail.” You must develop a solid plan on how to manage, market, expand, and spend in your business. That plan must also be flexible meaning it can be modified to work as changes in the market happen.
5. Do a quality-control test first
You can’t go straight to mass-producing a product without knowing if there’s a demand for it or if your customers won’t face consumption problems. Test it first in a group to see if there’s a need for improvement or perform A/B testing on two prototype products. That way, at the final launch, you’ll receive high satisfaction ratings which bring success to your business.
6. Keep good records
Record everything like receipts and customer engagement. This will help you price your services accurately, make budgets, monitor spending, and track profits. Records are also very important especially when it comes to paying taxes. If you made an inaccurate income declaration because you didn’t keep records, you’re in trouble.
7. Practice safety at all times
Safety means a lot of things like health, environment, working, crime hazards, etc. Be sure your office is clean with no pests or radioactive zones. Provide your employees or wear standard equipment when performing fieldwork. Comply with building safety regulations. Install security cameras.
8. Review the existing system of the internal controls
Internal controls are about the use of the internet, proper delegation, and working competence among employees. As you may know, too much and reckless internet usage can open your networks to cyberattacks.
Proper delegation is for assigning one job to one person. For example, you cannot make everyone in your team in charge of the finances. That only spells corruption, thievery, etc. Working competence is more about hiring the right people for the job.
Failure to review the existing system of internal controls regularly will cause an imbalance in a business. These balances put businesses at risk of bankruptcy, security breaches, and poor performance.
9. Identify, assess, and create management plans for potential business risks
Predict what problems your business will face in the future. Assess how devastating they will be for your venture. Devise plans on how to avoid and manage these problems. Start by planning on how to make your business survive when sales are low.
10. Know the law
Be familiar with business legal structures, employee rights, mandatory incentives, taxes, labor laws, etc. so you can comply with them properly and avoid getting in trouble with the government.
If there’s one thing this year has taught all of us, it’s to predict and prepare for all cases of negative scenarios while keeping a plan of action to reduce the damage of bad events. But enough of the negativity, Christmas is coming and it’s time to be cheerful. So Merry Christmas and a Happy New Year in advance! I hope you get to enjoy your holidays dear solopreneur. See you next year!