Entrepreneurship is all about taking risks. As much as you want everything to go as smoothly as possible, there’s really no “sure thing” in business and a million and one things could go wrong when starting a business. Plus of course, there’s always the possibility of failure.
The key, however, is to manage and reduce your risks when you are starting a business. Many pitfalls can be avoided with careful planning, though there may be some unforseen circumstances where you need to display creative thinking, flexibility and yes, persistence.
Here are some ways to reduce your risks when starting a business:
1. Plan for the worst case scenario.
You don’t start a business thinking it will fail; after all, you need all positive energy and positive thinking. Despite all optimism, however, thinking that there is a possibility of failure can keep you on your toes and force you to make better decisions.
2. Always exercise good judgement.
Avoid impulsive behavior and always analyze and examine your business decisions. Don’t get carried away by your impulses.
3. Use a check and balance system, particularly when making big decisions.
Sound off your ideas with people you trust — e.g. your spouse, your mentors or even a trusted adviser — to give you a different perspective of what you plan to do.
4. Find a mentor.
The advice of someone who has experienced it all when it comes to starting a business is invaluable. Go to forums or attend face-to-face events and network. Use organizations that help you find mentors.
5. Keep the focus on your strengths.
Don’t go grabbing every opportunity that comes you way, especially when they are out of your league. Especially in times of recession, focus on your core strengths. You’ll stand a higher chance of success building on what you know.
RELATED: Judgment and Strength of a Leader
6. Run lean but creative.
Don’t spend your money for the sake of spending you money. If you can find ways to market your business at the least cost possible, try them.
7. Market, market and market.
Even before your business opens, set the stage for marketing. Having customers all waiting for you to open your business can significantly reduce your risks while allowing you to immediately generate needed cashflows.
8. Consider getting the right type of insurance.
When thinking of mitigating risks, the first thing that comes to mind is insurance. Insurance products — such as liability insurance, workers compensation, property insurance, etc. — can protect you against claims made by customers, employees, vendors and other people you deal with in your business.