| In everything that we do there is always a certain | | | | How do you calculate risk? There's no specific |
| amount of risk. An individual cannot achieve his goals | | | | formula for calculating risk in business. The same |
| without risking something. The same is true in | | | | means does not assure you of the same outcome all |
| business. No matter what the nature of the business | | | | the time. Every time you start a business even if |
| there is always risk. We cannot totally eliminate risk in | | | | you've had the same type of business before does |
| business but we can control it. This is what we term | | | | not assure you that you will be facing the exact |
| as risk management. | | | | same problems as you did in your previous business. |
| Risk management plays a crucial role in business and | | | | Every venture will present you a unique set of |
| knowing how to calculate and handle these risks can | | | | problems plus the problems you've encountered |
| keep your business safe and healthy. Having your | | | | before. Calculating your risk is like an educated |
| own business can be a lot better and beneficial than | | | | estimate. You try to identify your problems and you |
| being someone else's employee but it does carry | | | | prepare your contingency plans; for every potential |
| some risks. Starting your own business does not | | | | problem you identify you would like to have at least |
| assure you that your business will succeed, let alone | | | | more than one solution. It's always better to have a |
| grow. So how do you manage your risk? You can | | | | plan B when plan A fails. Think of it as an emergency |
| start by educating yourself about the business that | | | | parachute when your main chute fails. Your potential |
| you want to venture into. Having a clear | | | | problems will range from finances, to personnel, to |
| understanding and knowledge of how to properly | | | | marketing to operations and more. These are some |
| start the business and how to manage it properly is a | | | | of the factors that comprise your risk as you go into |
| good place to start. Next, you would want to assess | | | | business. |
| your risk should you go into business. You have to | | | | In general terms, the smaller the capital, the smaller |
| identify the potential problems that you might | | | | the risk and the larger the capital, the higher the risk; |
| encounter once your business is operational already. | | | | your risk factor grows relative to your capitalization. |
| By doing so you will be able to prepare a contingency | | | | On the other hand however, high risk ventures also |
| plan for it long before it happens. You'll need to | | | | mean high returns should the venture turn out well. It |
| identify the different government agencies and | | | | is essential that you conduct a proper feasibility study |
| bureaus that are directly concerned with your | | | | before you start project development. A feasibility |
| business. You would also want to learn about | | | | study is a good way to assess your risk as well as |
| business law, especially those which directly affect | | | | find out if your idea is feasible. So you start with an |
| your business. The more you know about the laws | | | | idea, you conduct a feasibility study and then you |
| concerning your venture the better off you will be. | | | | assess your risk. Now that you've assessed your risk, |
| The more potential problems you identify and the | | | | you can start to manage it. |
| more contingency plans you have the lower the risk. | | | | |