A successful business is measured by its profits. It is measured by its customers and by looking at the extent of risk that is undertaken in order to achieve the project. Such businesses are run only by successful entrepreneurs who have the ability to bear any kind of risks and who react in a positive way to a situation when risk arises. The risk in a business can occur at any time. It can be at the start of a business or even when launching a new product on the market.
However, there are some steps that can help an entrepreneur to handle risks. We will discuss in this article the different types of risks which are broadly classified into two categories. First is an External risk which is unavoidable and the second is an Internal risk that is avoidable.
Important factors for Entrepreneur to consider
1. External risk – Unavoidable
This type of risk is usually uncontrollable and we say this because of the factors that are involved. This includes political issues, instability in the economic condition of the country like the exchange rates and the sudden change in the interest rate or it can also be because of the environment like a natural disaster. There is always very little that an entrepreneur can do when he faces external risks. Since these situations do not come out of the blue, he or she can always be prepared to handle such issues.
2. Internal risk – Avoidable
This type of risk is to some extent controllable. We will now look at some ways in which an entrepreneur can take the necessary steps in handling risks that are under his control. Let’s discuss 4 ways in which an entrepreneur can handle business risk.
- Business Insurance: Having insurance for a business is a priority, as it allows an entrepreneur to have peace of mind. While he or she focuses on the growth that is available and decides on which ones he or she would use for the business.
- Property insurance: This insurance covers the building, the machinery, office equipment’s like computers and also protects the business from breakdown, theft or even fire.
- Employee compensation insurance: This insurance is for the safety of the workers. It helps in the coverage of an emergency, especially it takes care of the employee’s medical treatment when injured on the job.
- Vehicle insurance: Since vehicles are used in a business, it becomes even more important to make sure that all the vehicles that are used are well maintained and are insured. Having vehicle insurance will help in taking care of any accidents or damage incurred.
Precaution is always better than cure. One can protect their business by proper video surveillance & access control. TX-Intellicomm is one of the pioneers in this that can identify security holes in your system and fix the same.
So, the bottom line is that having insurance for a business will not only protect the entrepreneur and the business but will also keep him or her protected from any legal complications and transfers the risks to the insurance companies.
3. Advance Payments
For a start-up business or any business to run smoothly an entrepreneur assures that the payments he receives from clients should be paid ahead in time. This helps the entrepreneur to deliver the product and services on time. It also gives the client some guarantee knowing that the services will be delivered or the amount would be refunded if the business fails to meet the agreed contract. Advance payment also helps in avoiding complications and default of payments. It also allows the entrepreneur to have a sufficient cash flow which helps in paying the bills in a timely fashion.
4. Employee Satisfaction
Heard the saying- ‘Happy people tend to be better workers’. When an employee is kept happy he will be willing to go that extra mile to help the entrepreneur in completing the project. One effective way to keep the employee satisfied is to provide training from time to time. This will help the employee to be up to date with the skills and to focus on the quality of work and not just the quantity. Training is like an investment in the growth of the business. It is crucial to take good care of the employees. Another way to keep the employee’s satisfied is by making sure that the workers are timely rewarded for their hard work and are refreshed by encouraging words.
5. Appointment of Risk Management Team
It is always best to employ a team that will handle risk management for a business. The core responsibility of this team is to identify and evaluate all the possible risks that can affect a business. They map out a plan, list steps and procedures that are required to handle risks. Once that is done they set up strategies to implement it immediately and help in the prevention of risks.
A successful entrepreneur always documents the plan and procedure of a risk that is already been handled. This helps him or her in time to refer in case the same risk occurs again in the future. And it is only when one faces such risks in a business that will help him or her to improve in decision making, planning and allocating resources and capital efficiently. Remember, Business is always exposed to risks. As discussed at the outset of this article a successful entrepreneur has the ability to face risks. What counts in the end is not closing the shop early in the game but how one stands against the wind and handles those risks.
