09 Jan How to Reduce Risk to Help Ensure Your Successful Entrepreneurship
The good news is, there are quick and easy ways to reduce your risk in entrepreneurship. This is a key element for your success. The more you can reduce the risks, the more certain you can be of receiving the rewards of your entrepreneurship and innovation.
Risk is often thought of as being a central element in entrepreneurship. Indeed, the Oxford dictionary defines an entrepreneur as “a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.” But does it have to be this way?
Fortunately, there are many effective strategies to reduce risk. By applying the strategies of ownership, control, scale, and diversification an entrepreneur can actually be thought of as a person pursuing business opportunities and “taking on less than normal financial risks in order to do so.”
A few of these strategies include:
Control: Ensure that you own and have easy access to all of the components related to your entrepreneurship, and that you have protected your domain, trademarks, copyrights, and related resources.
Positioning: Markets are often frequently changing. Evolving technologies can quickly change how people do things. Focusing your brand positioning on whom your business serves (your target persona), rather than how you serve them, can help you easily adapt to market changes, while building stronger relationships with your clients and prospects, as you help them with each change in the market.
Diversification: Trends can come and go quickly. Diversifying your product/service offerings (while keeping your focus on serving your target persona), can help you adapt to changing levels of engagement in each product or service. While some of your products or services might be down at a point in time, others can be up.
Scale: Clients’ needs can change quickly. Growing the number of clients you have can help to provide more stability for you. If some clients need to move on for various reasons, then you still have other clients whom you can successfully engage with and assist.
Testing: Test the market acceptance of your products and services before launching. Ensure your products and services will be well received by your clients and prospects, by testing with small groups of early adopters before you fully launch your offering publicly.
Growing with Demand: When you launch, start small. By starting small, you will be able to grow with the increasing demand for your products and services, as more prospects and clients see and use your services. Following demand can be a good approach. The alternative, launching in a big way, can put you ahead of demand, and then you can encounter large expenses in overhead before you have the client revenue to support those business costs.
Side Business: With the growth of ecommerce, you now have more opportunities to start your company as a side business. So you can start your entrepreneurship while you still are employed or engaged in other revenue-generating activities. This can help to give you time to grow your company.
Business Plan: Creating a business plan is an essential component helping you anticipate risks and challenges, and develop strategies ahead of time, so you can overcome those risks and challenges successfully. The exercise of developing a business plan can also help you see additional opportunities for success.
Questions and Ideation: The power of questioning, asking yourself “how can I succeed in x…”, can become a great ideation session for you, generating many new ideas for how to overcome risks and challenges. This also ties in with the power of positivity — to be successful, “you need to see the opportunity, to seize the opportunity.” Keeping an open, flexible mindset can be a very important resource for you.
Consult with People You Know: Talk with a wide range of trusted advisers, people you know: friends, family, clients, prospects, and others to gain their perspective. Fresh ideation and innovation can come from these discussions to help your business succeed.
Through these strategies and more, you can reduce risks and help to ensure the success of your entrepreneurship and innovation.
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