Most of us have those business ideas or projects to increase our streams of income. We need to weigh the risk and uncertainties which can come up with starting that business or project.
As an entrepreneur, it is always best to assess the risk and be aware of uncertain scenarios that might affect your line of business.
So what is the difference between Risk and Uncertainty?
Risk is the predicted chance of an outcome in the future and is also quantifiable whereas uncertainty cannot be predicted and is not quantifiable.
I will discuss a few types of risk and uncertainty which entrepreneurs might face:
- Employees – when starting a business you might hire employees to assist in achieving your goals. There is no guarantee that these employees can stay with you for longer so you have to factor in what to do if they resign without notice, how you continue with your business without affecting your customers. Besides leaving they might decide to have a strike which means this is going to cost the business, right? Hence it’s wise to assess beforehand.
- Health and safety – this depends on the line of business one is. But we need to consider things like breakdowns on major machines, fire, etc. and put measures to minimize it.
- Cybersecurity – in this digital world we now live in, there is a high risk that you can be hacked or website can crush.
- Recession or Booms – we are not sure how the economy might be in the near future that is, is it going to continue in a recession or might be a boom?
- Exchange rates – this always fluctuates every day and we do not know if the rate will be stable for a while or not
- Competition – when starting a business we do not know how the competitors are doing, are they going to innovate a new product or what. We won’t know.
So how can we minimize the risk when starting a business?
I will share a few tips below:
1) Business plan – Before starting that project put the ideas down on a piece of paper. Draft a business plan this way you will understand what it entails and can allow being proactive if they are any changes.
2) Market Research – Researching is always a good way of making sure the business will be a success. Do your 4P’s in the marketing mix and understand them.
3) Training staff – train your employees so that they can meet the expectations and the goals of your business.
With Uncertainty we will not know until it happens then we can assess the risk and have control measures. But just knowing and factoring it as part of the business plan is ideal.
Entrepreneurs are great at dealing with uncertainty and also very good at minimizing risk. That’s the classic great entrepreneur.” Mohnish Pabra
Author: Talent T Manyonga