What is one way for an entrepreneur to decrease risk when venturing into a business for the first time?
Getting into any business type comes with all kinds of risks you have to deal with, whether big or small.
The author of The Founder’s Dilemmas, Noam Wasserman, talks about the initial risks and difficulties that new players in the business world have to face.
More of the book as we go further. Let us first discuss what kinds of risks do new entrepreneurs have to look out for and reduce these dangers.
You can also check other books with similar topics from Blinklist’s over 4,000 non-fiction publications.
What Business Risks Does New Entrepreneurs Face?
We all know that entrepreneurs are generally risk-takers. Some would even jump straight into the business without any assurance.
Below are some common risks that you might encounter during the startup.
You must be mindful of your market, so you will know if there is a new competitor. Having a new player means that there’s a demand for your product or service.
Economic, Environmental, and Political Risk
Natural occurrences and disasters are beyond your control. Under-developed countries may need your product, but safety and stability may be an issue. Taxes and logistics may also be a concern.
Launching a business requires funds for the project to push through. It may come from investors, loans, family, or even your savings.
The fluctuating economy is one reason why the market trends also change. New competitors may launch a new product at a lower price.
That is another market risk that you need to be aware of as an entrepreneur.
As they say, first impressions last. The same goes for launching a business.
Satisfying your customer’s expectations is vital to your business’ reputation.
Effective strategies and business plans will attract investors to your project, but changes seem to happen swiftly these days.
What you have prepared may be outdated even before you launch your business.
Technology is now widely used in most business platforms. You need to have an updated system by the time you launch your business.
What Is One Way for an Entrepreneur to Decrease Risk?
Some companies try to invest in business risk management, hoping to minimize the damage that may affect their business.
This risk management only becomes effective when the business owner and their employees decide to work together.
One way to decrease the business risk for new entrepreneurs is to create an effective business game plan.
Know how much time and funds you need to launch your business. Do thorough market research to get an idea if your startup will succeed or fail.
You must also prepare yourself to accept that even well-planned business strategies may fail.
Below are additional ways to decrease your business risks.
Build Your Reputation
Build your reputation by earning the trust of your customers. It is better to have a long-running business than a short-lived success.
A business with an excellent reputation has more loyal customers and is considered more valuable.
Document Important Matters
Take note of all important transactions related to your business, like cooperation costs, sales, and tax payments.
It’s easier to monitor the movement of your finances if you record every expense.
It will also help you see if you are spending within what you can afford.
One of the best approaches to lessen your business risk is to get insurance. There are plenty of insurance packages to choose from but look for one with wide coverage.
Getting insured helps protect your business against accidents and natural disasters. Also, the coverage must extend to your employees.
Hire Significant Employees
When hiring employees, make sure that you give them tasks that match their skills. It’s a proven strategy to get the best out of your employees.
You can also adapt to this idea. Launch a product related to your skillset. Do not venture into something that you are not good at.
Try consulting experts before making a major decision concerning your project to gain other related insights.
Know the Law
Varying business rules and regulations are dependent on which state you decide to launch your startup.
It is best to consult a lawyer when it comes to specific business laws for more accurate information.
Some states carry out the Personal Properties Security Act allowing you to set up the Personal Properties Securities Register.
This protection covers equipment, patents, shares, vehicles, and more. It allows you to register the products and services that you bought, leased, or sold.
It also gives you the option to look up the business equipment you are about to buy and see if it’s not yet paid for or stolen.
Limit Business Loans
Business loans give you the needed funds for a startup or to maintain your venture. However, they can also put your business at risk.
One way to avoid applying for a loan is to plan your business according to your available funds and financial capacity.
If it’s inevitable to get a loan, ensure that it has low-interest rates, it’s within your budget, and that you can produce the funds to pay off the debt in time.
Protect Your Data
As more and more businesses adapt to modern technology, they also increase the risk of getting cyberattacks.
You must protect everything in your business, especially if you do online transactions, as your customers’ information may also be compromised.
Quality Control Tests
Perform quality control testing and customer reviews before officially launching your products to get the market’s pulse.
This strategy will also give you insights into what you need to improve your product or service according to consumer needs.
Learn how to save money and create an emergency fund in case your startup fails. Be vigilant about setting aside a particular amount for your savings.
You can also use your savings to expand your existing business, so you don’t have to look for investors for financial aid.
Spread Out Your Business
Offering various products and services to your market gives them the chance to choose from different options.
This strategy will also attract different types of customers. On your end, these additional options mean having several income sources, putting you ahead of your competitors.
Book Recommendation: The Founder’s Dilemmas
The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls that Can Sink a Startup by Noam Wasserman is a great read for new entrepreneurs.
The author discusses the difficulties that new entrepreneurs or founders experience when they first launched their businesses.
He offers a clear roadmap to success for budding entrepreneurs in the life sciences and technology industries.
He researched with numerous founders and determined that the main problem that most of them encountered was financial gain and control.
He pointed out that whatever decision is made, whether big or small, can make or break the business. Founders must learn to accept and adapt to the outcome.
Another startup problem concerns its people and how well they can work together. Hence, understanding the benefits of teamwork is vital for the business to progress.
He emphasized that new entrepreneurs need to have three major capitals to launch the startup: funds, people, and social capital.
According to the author, an entrepreneur’s goal of amassing financial gain while taking control of his company will not work.
Founders need to choose between getting wealthy and gaining complete control of the business to prosper.
Reading the book will guide you through the rough waters of entrepreneurship as it provides comprehensive steps for a startup to succeed.
Learn More on Blinklist
If you are interested in getting into business for the first time, you will find plenty of resources in Blinklist.
This book summary platform holds tons of non-fiction knowledge in different categories, which anyone can check out anytime, anywhere.
It even offers summaries of popular podcasts, aptly called shortcasts, so that you can listen to the gist of their discussion.
Find the appropriate books related to entrepreneurship, business risk management, and other informative publications.
Each book from the Blinklist database comes with a 10 to 20 minutes summary to give you a glimpse of what you will learn from reading the whole book.
The book summary even comes with an audio version that you can listen to while on the go.
You can opt for a seven-day free trial of Blinklist to see if it suits you. If not, then you can stop it anytime.
Ways to Reduce Business Risk
Learning what is one way for an entrepreneur to decrease risk when getting into a venture serves as a guide for newbies.
You can use the step-by-step pointers discussed by Noam Wasserman in his book The Founder’s Dilemmas as instructions as you launch your business.
Go to Blinklist if you need additional information about launching and managing a business or any other topic that might interest you.
The journey from founding a business to making it a success is bumpy with many twists and turns.
You need to make rational decisions since they will greatly impact your business and help you prepare for whatever outcome it may bring.