Entrepreneurs are risk takers, you hear this all the time. But does that mean that they will take any and every risk? Will they jump off a plane without a parachute? NO! Of course not.
What entrepreneurs do is to take calculated risks. They work out how much risk is involved in their idea, and then they cut it down as much as possible. Once they are comfortable with the risk level, they will be confident in executing the project. Entrepreneurs, unlike all others will not need every risk to be completely eliminated before they embark on their journey. They are willing to start even if some risks still exist.
So how do we mitigate risk?
We first start with research. As per your business idea study the following thoroughly;
Now we look at the costs of setting up and running the business. We identify the risk by the amount of money we put in. All businesses have chances of failing, how much you lose will depend on how much money is put in. Now to note, for some people, $10,000 will be a lot of money, and for some people $10,000 is nothing. So it is best to see risk according to your comfort level. You could start a cupcake business with $100(home business) and then scale up, or you could open a bakery with $100,000 on day one. The amount of money you put in the more risk there is.
Here are some things to look at to which you can attribute a dollar value:
Start Ups usually do not have huge budgets to spend on market research and testing. So to cut the risk of knowing if your product will be accepted by the market, you should so the following.
The small steps above will help you to cut your risk down as much as possible. The more you know about your business, the less risky it becomes. Do thorough research and ask yourself as many questions as you can. Play the devil’s advocate, or get others to do it for you. Get friends and family to play customers, and even do a beta launch, to bring the community in.
Remember it is all about cutting down risk, and not jumping off a plane without a parachute.
Activity: We will be uploading today’s Activity in the EntreCity Classroom later in the day.
CLICK HERE to Sign Up for the classroom access.