Business Advice: 5 Ways to Reduce Risks in the Early Stages
Building a business always comes with inherent risks. Products and services can rarely be developed without trial and error, funding is difficult to obtain, market demands can often fluctuate, and the competition might be tougher than you expected. And while many of these factors will be completely out of your control, there are a number of common early-stage risks you can reduce in an effort to support growth. Here’s how:
1. Prioritize delivering value for money
When launching a business, most entrepreneurs focus on building their knowledge and skills through specialized courses, reading books and industry websites, developing an app from the beginning, etc. And even though these are all important parts of the process, the truth is that they can wait. As long as you can solve their problems, consumers are already prepared to pay you. That is why it might be best to start by serving customers.
If you have any unique skills or special competencies, aim to monetize them – become the product yourself. Connect your target customers with related products or services they might need without creating competition, or provide consulting and coaching solutions to those you can benefit from the most. Offer your value proposition to your ideal customer and make money from the very start. Personal education, product development, and web presence can be built simultaneously without losing money.
2. Align your skills with your offerings
As a business leader, you might be tempted to focus on “the next big thing” with great potential. These shiny new ideas will often require additional knowledge and skills, which you can’t develop without extra time and investments. Instead, the best course of action would be to align your existing capabilities with the products or services you plan on offering.
For example, founders with technical skills can leverage their knowledge to create software solutions or early versions of different products without investing anything more than their time. When human capital is aligned with the offering in such a way, it’s easy to test, adjust, and pivot if necessary without wasting too many resources. This process will also allow you to gain a better understanding of your customers’ needs, generate some revenue in the early stages, and build a solid foundation for the future of your business.
3. Minimize any unnecessary expenses
All business risks can be significantly reduced simply by minimizing expenses. Unfortunately, financial management represents a serious issue for new entrepreneurs, with areas such as renting an overly large office space and building a team too quickly being some of the biggest concerns. Mitigate these risks by spending only on what you truly need and building your business one step at a time.
Factors like business insurance might be necessary for many companies around the world, but they can present a financial risk as well. For instance, you might have unknowingly paid for junk insurance that was unnecessary for your needs and sold using unethical practices. Thankfully, you can refund junk insurance with the help of experienced claims experts. But in the future, aid to minimize risks by carefully reading all documentation before signing.
4. Maintain an additional income stream
If you utilize your existing skills to deliver value for money quickly, you won’t need to keep your day job for long. But in the meantime, think of a steady job as insurance – quitting takes careful planning. You will have to define the monthly business revenue amount that will give you enough security to focus on your venture full-time, and then multiply the sum by at least three months. This is a good tactic for determining the stability of your business model and making a more informed decision.
If you’d rather run your own business on the side, you can use the same tactic when planning for your first hire. Save your limited time for the tasks that require your personal touch or those that only you can perform. For everything else, freelancers and contingent workers can be a great choice.
5. Surround yourself with the right people
It’s not uncommon for entrepreneurs to shy away from mentorships and seeking out support. However, the life experiences and unique knowledge a mentor provides can be of great help to any new business owner. The right person will give you valuable advice, help you prevent mistakes, aid in selecting the best business path, and accelerate your goal-reaching process.
When you compare these advantages to doing it all on your own, it will turn out to be much more affordable when it comes to both money and time. Fortunately, there are a number of ways you could find a reliable mentor, such as being active on social media, attending conferences and networking events, and making valuable connections. Choose a dependable person and develop a strong, mutually beneficial relationship to ensure success.
Every business will come with a certain amount of risk, including your own. But if you mitigate what you can early on and accept the factors you simply cannot change, you can increase your chances of long-term success.