Minimize Risks in Entrepreneurial Ventures

Catch the trade winds in your sails. Explore. Dream. Discover. --- Mark Twain, author

With all the jittery economic headlines these days, it’s a little ironic. Such scary times often inspire “would-be” entrepreneurs to sail off and discover new ventures.

Some people start feeling trapped in their present situation and start thinking ‘I’m tired of the insecurity. I want to be in control of my destiny, and I want to be my own boss.’ In fact, it’s a commonly held belief that when unemployment rates go up, so do start-ups.

I am surrounded by entrepreneurial-type people and my business is serving entrepreneurial-type people, specializing in small-to-medium-sized businesses. So I understand their hopes, dreams, enthusiasm, concerns and the potential risks they face.

There is still business out there, the question is, ‘Who is going to get it?’

These enterprising people are my kind of people because they are the forward-thinking optimists of this country. They are the ones who work hard to make life better for their families, their employees and their communities. They realize there is business out there and the question is, ‘Who is going to get it?’

No one wants to start a business only to see it suffer through painful liability issues or worse, to fail. While starting up a new business always comes with risk, new potential business owners can avoid making some mistakes by doing a little research and by learning from others.

1. Research which industries do better for start-ups. For instance, capital-intensive industries would probably not do well right now. A small Internet company or technical services might be feasible alternatives that would require relatively lesser amounts of capital.
2. Budget enough dollars to market your services or products. Marketing is critical to any new business success. Start-ups that implement a marketing plan fare much better than those who do not. Speaking of budgeting, a recession teaches us all how to be a little more frugal which isn’t a bad lesson. We all have to pay closer attention these days to cash flow, balance sheets and budgets.
3. Have a back-up plan for raising capital. Your business can be right on the verge of succeeding to higher levels, but if you’re not prepared with enough capital to take you there, you could be knocked down. I’ve seen businesses close their doors when they had no back-up plan for raising capital. For those seeking information about access to capital in these credit-strapped times, you may be interested in this recently issued U.S. Small Business Administration news release, ”SBA Announces New Ways to Improve Small Business Access to Capital.” 
4. Think about the people you want to hire to join your team. What kind of people do you want to attract? Will they have the same mindset about the product or service as you do? Will they share your passion? Again, I’ve seen it in a small business where the synergies of bringing in just one new person can absolutely reverse the likelihood for success. Most people don’t realize it, but hiring the wrong person or people can cause serious risk-management issues.

Here is where tough economic times might again work in your favor. There is a common misperception that employees are safer in a larger company until we start paying attention to the layoff headlines. So you actually might be able to attract more talent to your venture during a down economy. And until times get better, they might even be willing to consider less in salary.

In my next HRTools Insight, I will discuss more risk management issues that a start-up faces and how legal counsel plays a critical role.

American entrepreneurs are forward-thinking optimists. They make life better for our families, employees and communities. When they become business owners, some mistakes can be avoided.