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t's not a secret to anybody that COVID-19 has an impact on small and medium businesses all over the world. Due to it, 3.3% of surveyed small businesses in the USA said that they had to close their locations during the week ending January 9, 2022. That's why many people wonder «What is one way for an entrepreneur to reduce risk without prejudice to your business»?
For better or worse for businesses, there is no single thing you can do to avoid risks. You have to take a comprehensive approach to the issue. So, below I'm going to share nine powerful recommendations, that have been tested in practice.
Recommendation #1. Invest in the idea
Invest in such a business where you are good at. If you work in the IT-sphere, you deal with a mobile app's development easier than with an opening of a physical store. Moreover, it is not enough to be knowledgeable in a particular field. You need to know what industries are thriving, so you know what is one way for an entrepreneur to decrease risk. Your affair has to work at any time, even during financial crises. You should research your idea thoroughly to reveal all its pros and cons.
Hint: If you wanted to start your own business, you shouldn't do it by trying a new, unknown to you market segments.
Recommendation #2. Determine your audience
Among the many potential customers, you should select your target audience and focus on them to know what is one way for an entrepreneur to decrease risk. An overly holistic approach will not let you concentrate on the essentials. You can also pay attention to those, whose needs or desires have not yet been met by current salespeople, and center on them. Get a feel for your potential customers and put yourself in their places. Besides, think about your potential customers' age categories and their capacity to pay.
Tip: Study the Internet audience and pick out a separate group interested in the matter of your affair. Let's assume, these people make up a given percentage of internet users, and they are the ones who will be your potential customers.
Recommendation #3. Formulate a proposition
To stand out from the competition and satisfy the needs of your target audience as much as possible, formulate a unique selling proposition. Think about how you can implement it: on your own or attract business partners. Knowing the field of your business, offer your customers to participate in the working out of your product or service. Here is another proven one, what is one way for an entrepreneur to decrease risk.
Recommendation #4. Assess the potential
Assess the prospects for your development in the market. For this, you can use a SWOT analysis. This method helps to identify the internal strengths and weaknesses of the project, potential external/market opportunities, and threats, that may affect the development of the company. You can study a particular rival or the market as a whole using the same method.
After you have compiled such a table, one can already conclude what is one way for an entrepreneur to decrease risk. You have to learn how to prevent threats and maximize all opportunities based on the strengths of your product.
Recommendation #5. Determine a promotion strategy
A well-thought-out promotion strategy allows you to use the budget as effectively as possible. It is better not to spend a lot on advertising because many rivals are in the market, and the budget is small as a rule.
Pay your attention to the following pieces of advice:
- the main advertising support should be concentrated on the internet;
- participation in workshops, promotions, and barter partnerships will help get value for less investment;
- estimate the rivals' promotion products and count their approximate outgoings upon it.
Some statistics: About 5% of the surveyed respondents on small businesses in the U.S. declared that the most important problem for small businesses was poor sales. Thus, it can be roughly concluded that one way to decrease the risk for the entrepreneur is to attract online resources.
Recommendation #6. Single out the main business goals
Aim for the top to achieve your main aims. In other words, you have to determine particular figures for sales volume, the number of customers, and rental territory. Set specific goals for yourself: how many products per year you want to sell, in how many years you plan to expand your staff, etc. I recommend being courageous, but, at the same time, staying realistic. This foundation of what is one way for an entrepreneur to decrease risk.
Recommendation #7. Draw up a business plan
After doing the above stages, you should prepare a business plan. It is a detailed description of your project with all financial calculations and further prospects. It is needed by potential investors or the bank to which you will go for a loan.
Crucial fact: A business plan is usually written three to five years in advance. Nowadays, economic conditions change quickly, a development plan can be written only for a year.
The main assignment of a business plan is to convince potential partners that it is an interesting project for their investments. It is one more tip of what is one way for an entrepreneur to decrease risk at the beginning stage. A development plan has to answer the following questions: how much money is required to launch a project, and how long will it pay off.
Recommendation #8. Attract professional investors
Attraction to affair professionals is always a good idea. If they are investors, your business is bound to succeed already on 50 percent. In many countries, big transactions are made in syndicates. The syndicator is a professional investor with experience in independent bargains.
If you are ready to share the management of your business, this variant will be appropriate for you. Thus, you won't only look at the project through the eyes of a professional, but make out what is one way for an entrepreneur to decrease risk. Listen to the opinions of more experienced partners.
Recommendation #9. The new business is always the risk
Not always startups are profitable in the first months. You should be ready for any unpredictable situations, where you have to solve different issues. The business demands to make any kind of decision, whether even dangerous or involuntary. Seeing a positive development in your work is a good indicator, even it is too slow in your opinion. Your confidence in the affair has to be in the first place.
We live in a difficult time, and keeping a business afloat is troublesome work. The entrepreneurs should avoid or minimize any risks that thread to their plans. If they don't follow this, many people can lose jobs and be left without a livelihood. The essential thing lies in acknowledging a mistake in time.
These tips are based on the results of real businesses' faults. I hope that all recommendations can help determine what is one way for an entrepreneur to decrease risk. I wish you business proper within the local and global markets.
But there is another valuable tool for entrepreneurs. It is unlikely to help reduce business risks; however, it will help build relationships with customers, partners, and like-minded people. Download the Nection personal CRM to stay in touch with all your contacts. This app allows you to organize your business communications, build engagement with others, and manage your network connections.