Time and again, we’re told that starting a business is a risk filled venture. There seems to be no question that you can make a go of things unless you’re willing to risk all your money and step out on a limb. Hence, many entrepreneurs are risk takers.
And, that is one way of going about things. If you’re willing to put your savings on the line and step into the fast lane, good for you. But, most of us aren’t happy to accept risk in such a massive undertaking. And, nor should we. Would you spend that much money anywhere else risks were involved? Few of us would accept paying for a new car with no guarantee that we can keep it.
Which is why we’re here to tell the non-risk takers among you that it’s possible to succeed without risking everything. And, to prove the point, we’re going to look at the top three ways you can reduce the risk factor.
Avoid taking out loans
Let’s be honest; most start up risks are financial. To some degree, that’s always going to be the case. You are going to need to put some money into a business which might not work.
But, you can reduce the risk significantly by not getting a loan. While this is often seen as an attractive option, it’s a risky move. If your company doesn’t work, you’ll lose the money, and find yourself unable to repay. Before you know it, debt will come chasing you.
Instead of getting a business loan, use only your own money. And, to reduce the risk even further, keep costs as low as possible until you see a profit.
As a sole trader, you’re liable for anything that happens in your business. If a customer decides to sue, they’ll be suing, not your company.
Which is why you may want to consider opting for a limited liability company. There’s plenty of advice out there about how to start an llc, and it’s worth looking into. When operating a limited company, liability falls on your company, and not you. You may think they’re the same thing, but the law sees things differently. This way, lawsuits or payouts come from your company, not you. There is still a risk, of course, but your company’s protection reduces it.
Many pies for your fingers
Another significant risk is to focus on one thing. If that one thing fails, you won’t have anything to turn to.
To make sure this doesn’t happen, ensure you put as many fingers in as many pies as you possibly can. That’s not to say you need to operate different companies at the same time. Just that you need to attempt making your business a success in a few different ways. Working in a physical space and online, for example, would ensure you at least had a fallback plan. If your physical company didn’t work out, you could simply push your online company forward, and vice versa.