Did you know only 51% of small businesses last longer than five years?
When you hear a stat like that, starting a business can sound like a risky proposition. However, with a few simple tactics, you can dramatically lower the risks that come with starting a company.
Here are some tips that’ll help you reduce the risks of a business venture. Use these tips, and you’ll be able to start a business, even if you have a low tolerance for risk.
Let’s begin!
Should You Quit Your Job?
When you hear inspirational business stories, you often hear about people that quit their job to start their company. However, while these stories are fun to listen to, this approach can be very risky.
That is because you might end up spending a large chunk of your savings on a bad business idea. This can then possibly leave you with nothing at the end of the entire process.
A better approach is to launch your company while you are still working your job. In doing so, you can then use the income from your job to fund your business.
This approach will then help you avoid a situation wherein you end up with no money, or even lots of debt, because of a bad business idea.
Cap Your Downside
If you’re interested in risk mitigation, you need to think about how you can ‘cap your downside.’
To cap your downside, you will need to do two things. First, you need to identify some of the risks associated with your chosen business idea.
Once you’ve done this, you then need to figure out how you can minimize the impact of these risks.
So, suppose you launch a jewelry store that makes use of physical retail space.
One of the risks here is that your store could get robbed.
Well, there are a few things you can do to minimize the risks of getting robbed. That might include installing CCTV or even investing in an alarm system.
You can also protect yourself by investing in something known as ‘captive insurance.’ This is essentially a specialist ‘insurance vehicle’ that’s designed for businesses.
If you invest in this, the risks of starting a business are a lot lower, as you’ll be reimbursed if someone steals items from your store.
This insurance will also help you if you need to pay for any damage that someone might’ve caused during a robbery.
Do You Know How to Reduce the Risks of a Business Venture?
In this post, we’ve reviewed a few tactics that’ll help you reduce the risks of a business venture.
It’s worth noting that, a lot of time, risk minimization often comes down to being patient. That’s because if you’re patient, you’re less likely to take shortcuts that come with a lot of risks.
Now, taking things slowly doesn’t sound like the most fun thing in the world. Yet, it’s often the best approach if you want to keep your risk exposure as low as possible.
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