This week we will take a look at how the intrinsic risk factors can make things exceedingly hard for an entrepreneur to handle. In addition, we will determine why contingency plans are so crucial to success and how they come to an entrepreneur’s rescue. Let’s get started.
Entrepreneurs are often called gamblers and this is somewhat true. They are risk-seeking individuals but unlike gamblers, they carefully tread the path before making a leap. They take due time to decide when to take risks, whether it is a good idea to make further attempts or if they should simply move on.
Most of the entrepreneurs have a meticulously crafted business plan in place. They have clear financial projections derived out of certain assumptions. Despite employing a sound approach, the bitter truth is that it is not possible to predict and anticipate all the hurdles that will hamper an entrepreneur’s progress on the road to success.
Life is unpredictable and the corporate arena is no exception. You may play your cards right but success may still not be yours in the end. In fact, seasoned entrepreneurs are of the opinion that the business plan goes obsolete the day a start-up is launched. It is revised chronically as new conditions materialize. This is where the contingency plan steps in.
While it is possible to identify risks only to a certain extent, an entrepreneur and his team should have alternate routes to take if things don’t go as planned. It is crucial that an entrepreneur figures out not only the risks directly affecting the company but also those that can indirectly reflect on the company’s projections.
Once an entrepreneur figures out the risk factors, it becomes possible to map out the contingency plans. Contingency plans are the strongest tool in an entrepreneur’s arsenal against any unanticipated circumstances. Should things go wrong, he will remain calm knowing that a backup plan is already there to cushion his fall.
In times of crisis, entrepreneurs and key players may give in to desperate measures they may regret later. When an enterprise is slipping down the slope of failure, it is highly unlikely to execute an effective plan, let alone conceptualize it. An entrepreneur is already frantically trying to keep things from falling apart and when in fire-fighting mode, no room is left for planning.
When a business plan is evaluated for feasibility and the third party sees that an entrepreneur and management team has been realistic in their approach by listing everything that can go wrong, they know they are not betting on the wrong horse. Furthermore, when they see that an approach to addressing issues has been set as well, they know the entrepreneur will play his aces and that he has the key to success.