One of the common attributes of an entrepreneur is being a risk taker. After all, we’re willing to give up the safety of a steady paycheck and health benefits to forge our own paths. And while that’s admirable to many, our families might not think these risks are always worth taking.
While you can’t obliterate the risk you take as a business owner, you can mitigate it with a bit of planning and effort.
Have a plan in play
While we know what sometimes happens to the best-laid plans, we also know what happens when you start a business without a plan at all. In fact, lack of planning attributes to nearly half of the small businesses that fail.
It’s easy enough to circumvent this risk — simply put together a business plan. It doesn’t have to be 100 pages long; you can also write a great to-the-point plan that outlines your company goals, staff roles and plan to get new customers. And while your actual actions may deviate from the original plan, it’ll help you keep your overall goals in mind if you can refer back to your initial business plan.
Don’t put all your eggs in one basket
If you sell business services, you may have some clients who make up a bigger portion of your revenue than others. Don’t rely on them, because if they leave your company for any reason, you will have a large hole to fill to make up that income.
Likewise, have the same attitude about marketing. If you’re only using your company blog to reach new customers, what happens when Google changes the rules about SEO yet again and your blog takes a nosedive in traffic? Make sure you include plenty of diversity, including social media, content, public relations and ads.
Market when you don’t need it
If your business is thriving, you might feel like you can lighten up on your marketing efforts, when, in reality, the opposite is true. Market when you don’t need it, then when you do, you’ve already laid the groundwork in expanding your reach online and finding new customers.
Incorporate or file as an LLC
One of the best ways to mitigate your risk is to choose the right business structure. Both corporations and limited liability companies protect your personal assets, so if someone sues you, they can’t take anything that belongs to you. This brings peace of mind to entrepreneurs who don’t want to jeopardize their family home or other property for the sake of the business.
Have money in reserve
While profit margins may be slim, and you might not even be able to afford to take much of a salary at the start of your business, it is imperative that you set money aside in a savings account. Come that inevitable rainy day, you won’t have to stress over paying your staff or vendors if you have money in the bank.
With a little foresight and thinking ahead, you can lower your risk as a small business owner.
