Business Corner – Managing small business risks

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Small businesses are plagued by risk. Despite this, once you have decided to take the great step into the unknown by starting a small business! Great stuff! The world of the unknown awaits, and if you are excited and thrilled by the opportunities ahead, then good for you!

Of course, it isn’t anything new that small businesses and start-ups are inherently risky, and that 9 in 10 fail. And of course, there is the added fear factor of not getting a regular pay cheque, which means you have a limited amount of time to make sure that your business can start paying you for the work you put in. Here are some handy tips to help you, compiled by a bunch of people who have experienced small business risks first hand and want to help you learn from their experiences.

Pick something you are familiar to and can relate to

You either have been working in a particular sector or industry, and this is the perfect vantage point to launch from. Either you have seen a niche to call your own, or you have identified a way to make things work better, in any case you have seen that there may be a value proposition which will make customers move to you. This only happens after working and becoming familiar in a sector.

Make sure you take your connections with you

we don’t mean stealing customers! When working in a business, unless you have been operating underneath a rock, which you are finally crawling out from, you will have made contacts and connections with various stakeholders in the industry. Make sure that they take you under their wing as a trusted advisor or friend, and this involves putting in the hard work before you start your own business.

Understand your market

Before you go into anything, it is critical that you validate your business hypothesis before leaving the comfort of work. This only happens by really talking to stakeholders, and challenging them on their assumptions and views. And that takes time and thought. You cant just ask people about a new product you are planning to introduce into the market. Very few of them will give you honest answers, and the likelihood that they will actually buy your product in the future is often very low. Undertake focus groups and really ask the right questions which will glean an insight into where your product needs to be.

Test your Assumptions

Before you take the plunge of leaving work, make sure you introduce a beta version of your product and see the take up by the market. This does not have to be some elaborate test, where you have spent ages on your product. First, find out whether there is demand. A simple example would be, if you decide to set up a car wash is a good idea in your area, set up a website and do a facebook promotion to see how many phone calls, and email inquiries you get, as well as confirmed bookings. This will give you a good understanding of price points plus demand for your product/service.

Leave on good terms

Now that you have understood your market and feel that you have tested it to get an idea of whether your product will fly, this is when you leave your employer. But never, ever, burn your bridges when it comes to your employer, even if it was the most god forsaken place to work at. Reputation and integrity are the corner stones of success, you need to have and display bags full of both, and you never know when you will have to go back to key decision makers at your previous employer, should things go wrong.

Check out this great YouTube video by Evan Carmichael on what NOT to do when starting your business Enjoy!

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