Managing Risks-successful-Entrepreneurs-JS for TSM 19May2014

8/10/2019 Managing Risks-successful-Entrepreneurs-JS for TSM 19May2014

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Managing Risks for

Successful

Entrepreneurship


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Speculative Risk

Most business decisions,

such as marketing a new

product, involvespeculative risk.

speculative risk risk

that is inherent to a

business, involving the

chance of either profit orloss


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Pure Risk

A natural disaster, such as

a flood, or an accident

involving a customer oran employee is a pure

riskfor a business owner.

pure risk the threat of

a loss to a business

without any possibility of

gain, such as robbery oremployee theft.The 3 categories of pure

risk are:

Crime

Natural disasters

Accidents


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Risk Management Strategies

Simple risk management, preventing or reducing

business loss, involves three stages:

1. Identify the risks.

2. Estimate potential losses.

3. Determine the best way to deal with each risk.


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Risk Management Strategies

Managing risk involves these strategies:

risk avoidancenot an entrepreneurs choicerisk reduction

risk transfer = insurance such as property and

workers insurance


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Risk Reduction Examples

Business owners should take these example

steps to reduce risk:

Design work areas to lower chance of

accidents or fire.

Communicate with and educate employees on

safety practices.

Check and service safety equipment.Test company products extensively.

Security measures e.g. CCTV, secure doors


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An individual who

undertakes the

riskassociatedwith creating,

organizing, and

owning abusiness.

What is an entrepreneur?


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Personal characteristics of

successful entrepreneurs

Persistent, Creative,

Responsible, Goal-

oriented, Independent,Self-confident, strong

leadership, and Risk

taker


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Skills needed by

successful entrepreneurs

Communication skills

Human relations skills

Math skills

Problem-solving and

Decision-making skills

Technical skills

Basic business skills


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Successful Business Planning

Identify business opportunities

Scan competition

Define your key services/ products

Meet peers, businessmen

Put together a sound business plan

Find out effective funding avenues

Assemble a Capable Team

Plan your finances


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Successful Customer Focus

Get comfortable asking advice and help.

Improve Listening Skills

Talk to your competitors.

Talk to established entrepreneurs and Professionals. Networking and Industry Association.

Meet your Prospective / customers.

Understand your differential advantage.

To sell many, sell one. Beta TestingCustomers.

Maximize customer satisfaction.

Maintain a diary and take notes.


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MANAGING 10 RISK FACTORS1. Team experience and depth risk.Both the experience and track record of the

founders in starting a business, as well as their experience and knowledge of thebusiness domain. See if it is a balanced team who has been there and done that.

2. Market and opportunity risk.There is always less risk with a well-defined

problem in a large and growing market. All the people in Indonesia is a large and

growing market, but all the people in a specific area/location is much more well-

defined. Its hard to make money in a shrinking market, or with a solution that is nice

to have versus painfully needed.3. Competitive risk.Think seriously about the number and power of your competitors.

Having none is a red flag (may mean no market), but having more than a couple of

large ones may mean this is a crowded space. Even in an open space, you need

intellectual property, like patents, to keep potential competitors from overrunning you.

4. Financial risk.Very few businesses can be started without money. You as the

founder will be expected to put your own skin in the game. The business plan shouldbe realistic about how much cash will be required to break-even, and how big the

return will be for investors in 5 years.

5. Market entry strategy risk.The selection of an inappropriate pricing, marketing, or

distribution strategy is a large potential risk. For example, many new social websites

proclaim that they will offer a free service, and live on ad revenues (not likely in the

first year without a huge marketing investment).


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MANAGING 10 RISK FACTORS6. Political and economic risk.Sometimes founders are just in the wrong place at the

wrong time. Recessions are a tough time to sell luxury goods. Under-developed

countries may have a strong need for your product, but are often unstable and

dangerous. Understand taxation aspects.

7. Technology risk.New technologies, especially those characterized as paradigm

shifts or disruptive may have long and costly acceptance cycles, or may run into

unpredictable performance or manufacturing problems. Medical technologies have

costly legal testing requirements, approval processes, and insurance validation.

8. Businesses with high attrition rate risk.Certain business sectors have historical

high failure rates and are routinely avoided by investors and many founders. These

include food service, retail, consulting, work at home, and telemarketing. On the

Internet, I would add new social networking sites, and new matchmaking sites.

9. Operational risk.Some businesses require huge support or administrativeinfrastructures. For example, vehicle fuel improvements require service stations and

maintenance shops nationwide, before they are viable. Even small operations can have

breakdowns of specialized equipment and complex support processes.

10. Environmental risk. Evaluate your business and location for sensitivity to floods,

typhoons, landslide and catastrophic pollution problems (like an oil spill).


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BUSINESS

STRUCTURE

MARKETING

PREMISES &

EQUIPMENT

SCOPE OF

PROFESSIONAL

PRACTICE

FINANCE

BUSINESS

PLAN

IMPLEMENT YOUR

BUSINESS ROUTE MAP

MAKING A

STARTFINAL

DESTINATION

Legal & Financial

Advice

Naming your

Practice

Practice

Arrangements

Trading

Arrangements

Who Needs to

Know?

Learn from Experience

of Others

Entrepreneurship

Pros & Cons

Mentor

Networking

Grow your

business

Good Luck References &

Acknowledgements

Useful

Contacts

The 7 Ps of

Marketing

Why you

need

MarketingWhat is

Marketing?

Practice Accreditation

Clinical

Standards

CPD

Regulatory &

Professional

Bodies

Raising

Finance

Managing

Finance

Financial

Forecasts

Insurance


16/16

BUSINESS

STRUCTURE

MARKETING

PREMISES &

EQUIPMENT

SCOPE OF

PROFESSIONAL

PRACTICE

FINANCE

BUSINESS

PLAN

IMPLEMENT YOUR

BUSINESS ROUTE MAP

MAKING A

STARTFINAL

DESTINATION

Legal & Financial

Advice

Naming your

Practice

Practice

Arrangements

Trading

Arrangements

Who Needs to

Know?

Learn from Experience

of Others

Entrepreneurship

Pros & Cons

Mentor

Networking

Grow your

business

Good Luck References &

Acknowledgements

Useful

Contacts

The 7 Ps of

Marketing

Why you

need

MarketingWhat is

Marketing?

Practice Accreditation

Clinical

Standards

CPD

Regulatory &

Professional

Bodies

Raising

Finance

Managing

Finance

Financial

Forecasts

Insurance

Documents

Managing Risks-successful-Entrepreneurs-JS for TSM 19May2014