6 Ways to Reduce Risk

Today we want to talk about one of the biggest issues facing you when you start your own business. It keeps more people awake than most.

So let’s take it head on. Today’s subject is Risk.

That’s right, there’s a real fear of the risk attached to going alone. Will I lose everything? What if I fail? How can I reduce my risk?

Here’s the strange thing and we get asked this all the time. Once we talk with people about it and show them what they can do, those fears subside. We often feel like a doctor or a therapist.

You need to know how to identify potential risk and then reduce it before you even start. If you follow these steps you’ll have already avoided many of the main reasons businesses fail.

Before we get started you need to think of your business as prelaunch and post launch. Prelaunch is the phase when you’re developing and testing your idea, creating plans and building the resources you need. Post launch is when you’re building your business and crucially managing your cash flow.

So here are 6 risk reducing strategies

1) Don’t give up your day job

We will show you how to develop, research and test your business idea and create your first plans all while you’re still on your existing job. It’s the number one way most people start their first business and there’s nothing wrong with doing it. You need that cash from your current job as long as possible.

2) Manage your costs

You need every dollar and you need to spend those dollars wisely. We spend a lot of time helping people to reduce their costs. Think of cash as your oxygen – use it wisely. We’ve talked before about looking closely at your personal monthly expenditure and how you can save money as you set up your new business. There are awesome tools on WDTD for this.

3) Be conservative when you plan

Never be a hero at the planning stage. That’s right. it’s better to plan to spend $X on setting up your business and then come in under budget. Don’t plan to spend $y and come in thousands over. It can be a killer. No one praises you for a plan, they reward you for meeting or beating it!

4) Develop a “real” business plan

There are books and sites that will show you how to develop huge business plans. In fact, you’ll think that this is your new job if you follow all that advice. You need to develop a plan that works for you and the best advice comes from people who have been there before. You need to think of these specifics:

• Your plan needs to cover the first year of your business after launch
• The financials should be in enough detail to enable you to see at any time how you’re doing versus your plans
• You need to have a list of potential risks in your next year and think about what you’ll do if they occur

This sounds hard, but it’s easy once you know how.

5) Cash is king – so learn about cash flow

Running out of cash is expensive and may be fatal. We manage the cash in our business. So we plan for cash when it arrives from our customers and not when we make the sale. This is the essence off cash flow management. We obviously give you all the tools you need, but what you need to know now is that you should plan your use of cash. In one of our businesses our advertising network pays us 60 days after the sale. So we don’t plan on that cash until then.

6) Don’t reinvent the wheel

There are over 21.2 million small businesses in the US today. That means a lot of people have gone through this before. Don’t try and reinvent the wheel. Find someone you can rely on not necessarily someone that you like. That person needs to be able to give you tough as well as real love. Simply saying “that’s great” is not what you need to hear. Think of this help as your mentor or coach. Someone who has been through it before.

One of the main things that gets people worried about risk is their fear of the unknown. If you follow our 5 strategies and have a clear step by step approach with help you can trust, you’ll be a long way to reducing your risk and sleeping better!

If you don’t – you’re gambling with your money and your future. You’re just taking a chance.

Managing cash flow
Making plans
Being conservative

These are the key skills – Starting your own business should not be like gambling!

Sleep well!
Rob & Angelique