One of the major things an entrepreneur has to deal with on a regular basis is risk. An entrepreneur can ever be sure if his venture is going to work or not. However, there are some ways in which you can manage the risks and minimise them:
1. Weighing the risk
An entrepreneur needs to weigh a risk before he takes one to minimise future losses. Most entrepreneurs specialise in weighing the risk- if the plan fails, they don’t lose much but if it works, they stand to gain a lot by taking the risk. Also, one needs to have back-ups in case their idea fails. Hence, through simple ways they make their business more viable and sustainable.
2. Lean to plan and forecast the risk
Let the failure not come as an unpleasant surprise. You need to plan extensively about everything-the idea, marketing strategies, back-ups and the post-success plan. If you manage to forecast a risk almost perfectly, you have a chance to reduce it. Also, because you’re able to forecast a risk, you can come up with a risk management strategy to reduce its effects.
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3. Pursuing a new opportunity
Entrepreneurs often have the knack of spotting out shortcomings in the market and finding solutions to the problem. Pursing a new opportunity is a potential risk but in case their solution is viable, entrepreneurs stand the chance to gain a lot from it. Also, first mover advantage is what drives them to innovate further.
Example: Bhavish Aggarwal found a problem of transportation in the Indian market which needed to be solved. He came up with Ola services which is a huge hit in the market today.
4. Reduce financial risks
Reducing financial risk by managing your accounts receivable to minimize outstanding balances and identify poor credit risks early on in your business is the key to risk management. To reduce financial risks further, one can implement credit and payment standards, specifying which credit scores and payment records are acceptable. You can take professional help for credit control and manage cash inflow. Try keeping outstanding loans and financing needs to a minimum. It is very important to monitor growth rate and let the company grow to an extent which is manageable.
5. Insurance is the key
Transfer your risks to insurance companies by protecting them against damaged liabilities, injuries and incapacities. By insuring all kinds of raw materials and proceedings, you stand a chance to lose very less in case of a business or a plan failure.
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