Decrease Your Risk in a Start-Up Business - 3 Smart Ways on How to Do It
There are thousands of new businesses that start all over the world every day.
However, statistics shows that 9 out of these 10 new businesses will fail within the first 5 years.
We might know a friend or a family member who started a business and failed on the venture.
The chance of failing is high.
And many times, the risk is enough to paralyze and stop a would-be entrepreneur from starting one.
How do we decrease the risk of business start-up? 1) Do Your Market Study - The bulk of the task of the entrepreneur begins even before the business begins.
Market research is the process of removing the guesswork from the facts.
Although, market research could not give you 100% accuracy, the process will help you assess if your business idea is worth pursuing or not.
Your confidence level should be very high before you lay down your cash on the line.
After all, the odds of failing is high.
Market research can come in an informal setting like asking questions in a conversation with friends or family members.
If you are an existing customer of a competitor, chatting with the business owner and asking subtle probing questions without giving a hint that you are doing a market research is an activity that could help you down the road.
You can also do a formal market research by coming up with sets of questionnaires and making a random survey taken from the market segment that your business will serve.
The goal of the survey is to uncover customer demands, pricing sensitivity, current customer experiences, possible product innovation, customer wants and desires.
2) Gain Specialized knowledge - You can't learn a business fully by just reading books or attending seminars in as much as you don't learn biking or swimming by reading alone.
How do you learn your business industry better even before starting one? Work and apply in one of the similar businesses.
It is like being an apprentice and getting paid at the same time.
Do you want to start a pizza outlet? Apply as crew in one of pizza outlets.
Then make your stay purposeful.
Get the suppliers addresses in the boxes.
Count the foot traffic in the vicinity.
Learn how much is the cost of manufacturing the product.
Be purposeful and make your working days a thorough educational experience.
Do you have a friend in a similar business at a different location? Ideally, 10 miles from where you plan to start your business is a good number.
Ask if he or she can take you as an apprentice.
3) Micromanagement of Capital Spending- One of the top 5 reasons why many businesses fold is drying of cash flow.
The business owner ventured into the business and he or she runs out of capital before the business starts to pick up and earn money.
You can avoid this situation by being prudent from the very beginning.
Instead of buying equipments, you can borrow, rent or buy used equipments.
Instead of renting an office, you can operate from your own garage.
Don't buy unnecessary purchases.
Keep your operating cost as small as possible without compromising the quality of your products.
Make sure also that you have some buffer capital to sustain your business for the first 6 months.
Normally, it takes about that time for a healthy business to start earning profit.
However, statistics shows that 9 out of these 10 new businesses will fail within the first 5 years.
We might know a friend or a family member who started a business and failed on the venture.
The chance of failing is high.
And many times, the risk is enough to paralyze and stop a would-be entrepreneur from starting one.
How do we decrease the risk of business start-up? 1) Do Your Market Study - The bulk of the task of the entrepreneur begins even before the business begins.
Market research is the process of removing the guesswork from the facts.
Although, market research could not give you 100% accuracy, the process will help you assess if your business idea is worth pursuing or not.
Your confidence level should be very high before you lay down your cash on the line.
After all, the odds of failing is high.
Market research can come in an informal setting like asking questions in a conversation with friends or family members.
If you are an existing customer of a competitor, chatting with the business owner and asking subtle probing questions without giving a hint that you are doing a market research is an activity that could help you down the road.
You can also do a formal market research by coming up with sets of questionnaires and making a random survey taken from the market segment that your business will serve.
The goal of the survey is to uncover customer demands, pricing sensitivity, current customer experiences, possible product innovation, customer wants and desires.
2) Gain Specialized knowledge - You can't learn a business fully by just reading books or attending seminars in as much as you don't learn biking or swimming by reading alone.
How do you learn your business industry better even before starting one? Work and apply in one of the similar businesses.
It is like being an apprentice and getting paid at the same time.
Do you want to start a pizza outlet? Apply as crew in one of pizza outlets.
Then make your stay purposeful.
Get the suppliers addresses in the boxes.
Count the foot traffic in the vicinity.
Learn how much is the cost of manufacturing the product.
Be purposeful and make your working days a thorough educational experience.
Do you have a friend in a similar business at a different location? Ideally, 10 miles from where you plan to start your business is a good number.
Ask if he or she can take you as an apprentice.
3) Micromanagement of Capital Spending- One of the top 5 reasons why many businesses fold is drying of cash flow.
The business owner ventured into the business and he or she runs out of capital before the business starts to pick up and earn money.
You can avoid this situation by being prudent from the very beginning.
Instead of buying equipments, you can borrow, rent or buy used equipments.
Instead of renting an office, you can operate from your own garage.
Don't buy unnecessary purchases.
Keep your operating cost as small as possible without compromising the quality of your products.
Make sure also that you have some buffer capital to sustain your business for the first 6 months.
Normally, it takes about that time for a healthy business to start earning profit.
