Starting your own business is exciting but with 90% of businesses failing within the first year it’s important that you take steps to minimise the risks involved in starting your own business and maximise your chance of success.
Many first-time business owners are so occupied with getting their business sorted for their grand opening they forget to look into the challenges ahead. Having a clear and systematic plan of attack—otherwise known as a business plan—for the months after launching your business will help maximise your chances of success.
Here we look at some of the most common risks businesses face and how you can overcome them. Business risks generally fall into three categories:
- Market Risk
- Internal Risk
- Financial Risk
Market risks center on the possibility of your products and services not selling as well as you had hoped. It’s a very common and understandable fear. The good news here is that you can actually remove the risk entirely. All you have to do is make sure you do your groundwork before you launch your business. Test your business idea with potential customers, conduct market research and make sure you really understand your target customer, their needs and wants.
It is also essential to make sure that the market will support your product at the price at which you will need to sell it for. We all have things that we would like however we can’t afford them so we make do without. You need to be sure that your product or service is priced at a level that is acceptable and attractive to your target market.
Internal risks are based around your capacity and ability to deliver what you say you will to customer whilst maintaining quality. Having staff that are experienced enough to handle everyday challenges also fall under the category of internal issues. To reduce the risk of having internal problems you’ll need to identify any capability issues before starting up.
Financial risk is the final- but arguably the most important of the three risks you need to consider. This covers the ability to make a profit once the business starts up, as well as ensuring you have the funds to keep running until you actually make money. There will always be inevitable unforeseen costs, however good business planning and financial planning can reduce these risks.
Just remember, there is no need for you to go through the whole ordeal alone. Surround yourself with people who have the experience and expertise to assist you in turning your plans into reality.
As much as proper planning can minimise the risks of starting a business it would be foolish to think that you can avoid having any problems when you start up a business. There will always be the unexpected surprises and problem.