Entrepreneurship can’t go without certain risks, as plenty of trial and error is needed to deliver valuable and profitable solutions. Even the mere process of starting your own business can come with common risks such as low market demand, insufficient funds, and tough competition. However, you can reduce the number of common early-stage business risks, especially if you take some wise and calculated steps in advance to manage them effectively. With that in mind, here are some simple ways you could reduce common early-stage risks when starting a business:
Aim to deliver more value for cash
When preparing for a launch, most entrepreneurs will begin by creating a website and educating themselves to fill any knowledge gaps. But even though personal growth, product development, and an established web presence are important, they can be accomplished later. The truth is that customers are willing to pay you for resolving their issues right now. If at all possible, try to be the product yourself from the very beginning in order to deliver more value for money. Sell your current knowledge and skills as a service, raise the funds you need for further research and development, and meet your targets early on to ensure success from the very beginning.
Minimise any unnecessary expenses
Common early-stage business risks can’t be reduced without minimising expenses, especially unnecessary ones. The most common issues include borrowing too much money, renting an overly large office space, hiring employees too soon, and investing in advertising or product development without careful consideration. To avoid these mistakes and reduce expenses as much as possible, reevaluate the needs of your business and fulfil only what you must. Start small, and aim to build one aspect at a time as you go. Diversification is disastrous for business strategies; clear focus and prioritisation are needed for building and growing a successful business.
Make sure you remain compliant
Companies that end up on the wrong side of the law could potentially face fines or even prosecution, whether the mistakes were made intentionally or not. To prevent this from happening, you have to ensure your business complies with all the laws and regulations that pertain to it, such as corporate governance, business licenses, tax compliance, employment laws, etc. If you’re not an expert in these fields yourself, hiring lawyers, accountants, and other relevant professionals is always advised. This is one larger expense that is well worth the investment once you reduce the common early-stage business risks that are considered.
Reconsider your insurance policies
Although insurance is an essential aspect of starting a business, one that protects both you and your assets, it can be another unnecessary expense as well. For instance, many companies have been paying for junk insurance unknowingly. This is a form of add-on insurance that doesn’t offer real value to clients but costs them thousands of dollars. Not to mention that it is often sold using unethical and deceptive sales practices. Fortunately, you can claim a refund on junk insurance with the help of experienced professionals if you’ve paid for it unintentionally. In the future, make it a point to read each insurance policy carefully before signing to avoid unnecessary expenses.
Align your skills with your offerings
During the early stages, it’s not uncommon to be tempted by new ideas with good growth potential. However, these prospects often require additional skills and knowledge, as well as plenty of time and money to build them. Instead, make sure these are variables you can actually control. Stick to your current skills and expertise and align them with the solution you are offering in order to be able to test solutions and change focus quickly without experiencing additional expenses. This may even allow you to gain a deeper understanding of your consumers’ needs, generate more revenue in the beginning, and set a strong foundation for the future of your business.
Maintain an additional income stream
If you minimise costs and leverage skills to deliver value for money, you won’t need to keep a day job for long. Meanwhile, consider your steady job as a form of insurance, as quitting takes plenty of advanced planning. You will need to begin by defining specific targets for the business revenue that are enough to provide security for full-time devotion to the business. Then, multiply this sum by at least three months to test the viability of your model and make more confident and informed decisions. Running a company on the side is also an option, but you should still use this same formula as a guide when planning for your first hires.
Build the right team early on
As your company begins growing and you delegate some responsibility to your employees, one part of your business’s success will inevitably depend on them. The earlier you hire, the more crucial that individual will be to your company’s overall success. To reduce the risk of hiring the wrong people, aim to hire slowly and wisely. Inputs from core team members, several interviews, practice assignments, and excellent demonstrated performance can all help in making the right decision. Provide suitable financial compensation and offer the best employee benefits you can as a small business to improve retention.
Spend time with the right people
Mentorship isn’t all that popular among entrepreneurs; some may be sceptical about these relationships while others could simply be nervous about approaching the process. However, great mentors can be much more beneficial to new business owners than doing it all on your own, with only your skills and knowledge. Seasoned professionals in your field have much more experience with starting and running a business, meaning that they could help you select the right professional path, avoid common mistakes, and speed up your goal-reaching process. What’s more, mentors are quite simple to find, from conferences and networking events to online platforms, so make sure to surround yourself with good ones.
A certain amount of risk is inevitable in business and should be accepted early on. You can reduce the most common early-stage business risks easily, enabling you to establish a strong business and accelerate your road to success