Why Entrepreneurs Need to Focus on Risk Management First
~by Mila Sanchez~
If you have dreams of starting your own business, or have already opened one, you know there are so many things you have to think about. For instance: what do you want to sell? What service do you want to provide? Where do you want your business to be located? How do you reach your intended customers? But, the thing you need to think about most is risk management.
As any entrepreneur knows, there is a lot of risk involved in starting a business. In fact, nine out of 10 startups will fail. This sounds like a scary number, but don’t let it hinder your drive. However, do let it highlight the importance of addressing and managing your risks as you go forward with your ideas. Project managers for established businesses know the sensitive and serious nature of analyzing and managing their risks, and the basic principles can really be applied to startups as well. What else is a startup other than a big project you hope succeeds?!
Here are some risks you should be aware of so you can best prepare for and manage them.
Researching the market and demand
Taking a good look at the market and demand is vital when determining if your business idea is a viable and sustainable one. Is there a demand for the product you want to offer? Is that demand already being filled by other businesses? If so, what is it about your product that makes it stand out among the rest?
For example, sushi is constantly growing in popularity. But if your city of 200,000 people already has 20 sushi restaurants with moderate traffic, there is a good chance that opening another restaurant dedicated to that delectable delight won’t have outstanding success. Unless you can guarantee that your product is different and better than the rest out there, it might be better to work on a business plan that addresses a demand not already being filled by others. By figuring this out in the beginning, you can eliminate some of the risk of your business failing.
Identifying your customers and outreach
Whether your business is offering an entirely original idea or a new product you’ve invented, you need to identify your customers. Who is your target customer? Why is your product something that they need? How are you going to reach them and provide your product?
Luckily, it’s easy to research these questions with the internet. You can see if people are complaining about the problem you are trying to solve or having conversations surrounding the idea. Once you can see who might want your product or service, it’s time to find the best way to reach these potential customers. If you can’t effectively reach them, your business will never have a fighting chance. The risk here is your new product or service and whether or not it is going to be successful; researching and finding your target customer is going to make planning for reducing this risk a lot easier.
Keeping your business safe
With technology creating so much access these days, starting a business has become easier than ever before. Almost all functions and information on the “paper” side of your business is done through computer programs and online, making many processes efficient and accessible. Unfortunately, all of your sensitive business information being digital makes you a target for cybercrime, and small businesses and startups are especially vulnerable.
Cybercrime is a huge risk, and if you are attacked, it can destroy your business and even your livelihood, as you are likely heavily invested in your own business. Using proper firewalls and security encryptions are essential to keeping your business data and your customers’ credit and debit card information safe. Routinely running virus and malware scans will also help prevent and stop attacks to your hardware and software.
Knowing and managing your risks will help set you up for success as you ride the rollercoaster that is starting a business. With the help of technology, you can easily research your market and demand, find and reach your customers, and secure your business data. The more you can plan and control these risks surrounding your startup, the more you are setting your new business up for success.
Meet the Author: Mila Sanchez
Mila Sanchez is a writer with a BA in English Linguistics living in beautiful Boise, ID. Her ambitions include traveling the world, studying languages and taking pictures of her dog, Baymax. Connect with her on Twitter and Instagram!