7 Ways to Weigh Your Start-Up Risks -- and Reduce Them Starting up is obviously a risk, which can make jumping right in scary. Here's how to minimize those risks to boost your entrepreneurial rewards.
When you were a kid, how often would you ride your bike down a steep street while letting go of the handlebars, or take your sled to the top of the highest hill in town, not even considering that a false move could end in a tumble? Back then, you knew that the ride was worth the risk.
Now, with your own business, are you questioning every decision and avoiding the high hills of opportunity because of a fear of falling? It's a natural reaction, but it can kill your aspirations and cost you the thrill of that amazing ride to success. Here are some things to consider that may make it easier to leap more fully into entrepreneurship:
1. Worst case scenario: What's the worst that could happen if you take this risk and fail? Would it be a setback for your business? Maybe. Would it destroy your business completely? Probably not. Take a look at the most disastrous possibility. Could you survive it? If so, it may be time to jump.
2. The next-best choice: If you don't take this risk, what is your next best option? Is it less risky? Will it make as much of a difference if it succeeds? Consider all of your options. If the higher risk choice still seems like the best one, take it.
3. Plan B: The old saying don't switch horses in mid-stream doesn't fit here. If you take your risky move and it's not working, switch gears immediately. Have a Plan B and maybe even a Plan C ready if you need them.
4. Get opinions: You think this is a great idea. Now ask some people that you respect with experience what they think. In the best case, they will relieve some of your anxieties and maybe even have some ideas to reduce the risk. They may also tell you not to do it. If enough people say that, it may pay to listen.
5. Plan, plan, plan: You can reduce risk simply by building a strong plan. Spend some time determining every step so that you are prepared to execute successfully. You may want to use project-planning software or draw up a flowchart with milestones and measures for success. That way you can ensure that you stay on track and that your plan is working.
6. Testing…testing: Can you start with a small test of your risky idea and see how it works? Maybe you approach only one current customer with the new idea, or try it in only one of your operations. If it's a special offer, set it up for a limited time only. You can always extend it or bring it back if it's a success. This way you minimize the downside potential while still leaving the possibility for upside.
7. Jump in: When you've analyzed and asked and planned and thought through everything, it's time to make that move. Conjure up the feeling you had when you were at the top of that high hill or steep street and let yourself go. Don't think about the risks, just enjoy the ride. That's part of the joy of being an entrepreneur.