Starting your own business is tough. Statistics show that 8 out of 10 businesses fail within the first three years. There are literally thousands of companies founded every year but most of them fail.
If you want to start and build a successful business, you have to reduce your business risks and increase your chances. In this blog post, I will share 5 proven strategies that can dramatically reduce your business risks. This will set you well on your way to becoming a successful entrepreneur in the near future.
Strategy #1: Start with what you have.
This strategy is very important. To build a successful business, you have to start somewhere. So our first strategy to reduce business risks and increase your chances of becoming a successful entrepreneur is – Start with what you have.
I think the number 1 reason why most people fail is very simple, they don’t get started. People love to make excuses. They wait for the ‘perfect time’ and condition before they begin. You probably know that the perfect time and perfect condition will never come. You will always feel like you are not prepared and there’s so much more to learn.
This is what you must do, you’ve got to start right now and I mean start with what you have.
Ask yourself: Who am I? What do I know? Whom do I know? What are my skills? What are my available resources?
Imagine different possibilities and outcomes based on your own abilities.
Strategy # 2: Define your affordable loss.
The second strategy to dramatically reduce your business risks is defining your affordable loss. Invest only as much as you can afford to lose rather than focusing on huge imaginary returns. In order to protect yourself, define your affordable loss at an early stage.
Affordable loss is a concept defined by Prof. Saras Sarasvathy of the University of Virginia’s Darden School. The website effectuation.org provides a very concise definition of the concept:
Affordable loss involves decision makers estimating what they might be able to put at risk and determining what they are willing to lose in order to follow a course of action.
Affordable loss helps an entrepreneur know when something is not working and gives a signal that an effort should be stopped or redirected before too much money and time is spent.
Strategy # 3: Form partnerships
A partnership is an agreement between two or more people to finance and operate a business.
Working together with partners and stakeholders significantly reduces uncertainty. It allows you to create new markets together with people who have complementary skill set to yours, which also reduces your business risks. Your business will have a wider pool of knowledge, skills and contacts.
Starting a new business with one or more partners increases your initial capital which reduces your financial risks at the same time.
Strategy # 4: Stay flexible
One of the biggest problems in business is that, when you think you have a settled business model in a stable market, things change. To minimize your business risks, you have to be flexible enough to adapt to different scenarios.
If life gives you lemons, make lemonade. Seemingly bad surprises and unexpected turns are not always bad. Always try to see them as new opportunities.
Strategy # 5: Stop predicting the future, create it
Don’t waste your time spending too many hours worrying about what might or could happen to your venture. Focus on activities that lie within your control. If you do that, you are creating the future and not just predicting it.
Time is a precious resource, and focusing time on things that can be controlled is the greatest use of that resource. Formulating a plan on tangible items and establishing a timeline on when to complete each task are critical. This process will cut down on needless time, worry and even expense trying to fix the things beyond our control.
Related Article: “Super Power” to Predict Your Future
I hope these strategies help you in your new business venture. I know I’ve missed more strategies and now it’s time for you to share what you have in mind. Kindly share what you can add to this discussion in the comment box below.
If you know someone who will benefit from this, kindly share it to them.