Drug testing

How Much Risk is Necessary to Grow Your Business?

A business owner is thoroughly responsible for their own financial survival and possibly the financial survival of their employees. Business owners, for the most part, seem to be "risk takers", who really don't easily "go with the flow". They are inventive and somewhat confident, as just having their own business does mandate that they possess these qualities.

However, the ability to live with risk is very much a personal issue. Some business owners can live with more risk than others and some can manage the risk better than others.

Having the ability to effectively manage risk is imperative for a successful business venture. Therefore business owners need to be able to effectively judge how much risk is "acceptable" and which business ventures are inherently "too risky" and therefore perhaps harmful to the business overall.

While all businesses must grow and change continually in order to survive, every time a business makes a decision to expand or increase its offerings, a modicum of risk does exist. Most businesses face risks when they incorporate new offerings into their current ones, take on new employees, when they change their marketing techniques sufficiently, or when they expand into new areas of business above and beyond the general core or "parent" business.

Each time a new project, venture or offering is added to a business, "risk containment" should be employed. It is never possible to eliminate all risks completely, but containing risks to an acceptable level will enhance the experience and keep the overall losses at an acceptable level, if failure of the new venture or offering does occur.

Business owners need to assess the risk using the following principles:

1. Is this risk necessary for the further development of the business? If so, why?

2. Is this risk attainable for the business? If so, why?

3. Is this risk affordable for the business? If not, then it shouldn't be done. A strict, realistic assessment of funds available and a budget should be worked out before a business embarks on any type of expansion or addition to its present offerings.

4. Is the "timing" right for the new addition or venture? Many times, if a business is experiencing a downward cycle or other financially stressful barriers, expansions or additions are best left for another period in the life of a business.

Many business owners make one of two serious mistakes: they either refuse to gamble at all, and don't therefore grow their business appropriately, or they gamble too much, exposing their business to such a high degree of risk that eventually the business finds itself in financial difficulties.

Example A: John has owned his own print shop for several decades, during which time he has enjoyed much success. The newest technologies, though, could increase John's clientele and the speed at which he delivers his goods to existing clients. John, though, is thoroughly risk aversive, concerned about the expense of expenditures that would follow incorporation of the latest technologies, and therefore, John does not incorporate them. As a result, he has lost some existing clients and many times fails to add new ones, effectively hurting his bottom line.

Example B: Miriam owns her own real estate company and does very well with it, employing ten people. Miriam feels the need for new challenges however, and decides to buy several investment properties herself. The properties she buys are extremely expensive, and need much upkeep. In order to purchase them, Miriam borrows "against" her existing business, using that as collateral for the loans she must acquire. Within mere months, Miriam experiences several major repairs needed on each of the newly acquired buildings. She then must borrow yet again to afford these, and finds herself going deeper and deeper into debt. It becomes a struggle finally, to even "hold onto" the original business, as she now owes enormously to several creditors.

As you can see, John, is much too risk aversive, while Miriam failed to take into consideration the many difficulties that could occur with large-scale expansion of this sort. Neither is correct in their assessment or approach to risk management and each has hurt their own businesses as a result.

The old adage, "Slow but steady, wins the race" really applies significantly to business and appropriate risk management within a business. Business owners should plan thoroughly and weigh their risks completely before proceeding with any new venture or expansion. However, businesses also need "planned growth" throughout given periods.

Business owners need to use their judgment wisely at all times, and use it well, when considering appropriate risk management techniques.

Vishal P. Rao is the owner of: http://www.work-at-home-forum.com/ An online community of people who work at home.

limousine chicago service
In The News:

Creativity & Entrepreneurship: The Secret to Discovering Your Purpose in Life!?

Hello Creative Entrepreneurs!In the second course on Creativity & Entrepreneurship... Read More

The Fear Factor

I recently conducted a lil' survey asking my colleagues what... Read More

Enterprising Route is to Go Your Own Way

DON'T talk to me about education for entrepreneurs. They're pouring... Read More

Franchises - Emotional Fulfillment - Control Your Destiny

Does A Franchise Meet Your Needs?When you think of becoming... Read More

The History of the Franchise Business - Learning about Business Opportunities by Looking at the Past

Hair care has been around as long as humans have... Read More

Applying The Daffodil Theory into Business Practice

At times all of us need a bit of inspiration... Read More

Electronic Tools for Entrepreneurial Success

"Half of any job is having the right tool" was... Read More

The Use of Common Stock in Venture Capital Transactions

When raising capital for a business venture, a company can... Read More

What Makes a Person an Entrepreneur?

Entrepreneurship is generally characterized by some type of innovation, a... Read More

Does It Really Take Money To Make Money (Online or Offline)? A Reality-Check of 2 Case Studies

The short and simple answer to this question is NO!Now,... Read More

Increase Profits with No Pain, No Change Approach

Implementing changes, even when they're good for your business, can... Read More

Create Your Entrepreneur Dream Team

I hear it all the time. "What should I do... Read More

Are You An Entrepreneur?

With all the buzz about everybody being an entrepreneur these... Read More

10 Ways Entrepreneurs Shoot Themselves In The Foot

Entrepreneurs and their businesses have a tendency to ambush themselves... Read More

Walt Disneys Failures Could Inspire Entrepreneurs

You are a struggling entrepreneur and sometimes it feels like... Read More

Angel Investors: 7 Online Business Plan Scams and 1 Real Deal

We've all seen the hype: "We'll put your plan in... Read More

Solving the Million Dollar Mystery: 4 Steps To Create A Turn-Key Business

You're a smart, hardworking entrepreneur, and you're moving fast. You... Read More

The Six ?F? Words Every Entrepreneur Should Know

Start your own business, and soon enough, you find yourself... Read More

Oil Change Guys History; Part I

How do franchise companies come to be? How do they... Read More

Could a Non-Profit Structure Be Right for Your Business?

If you have a business idea, or an idea for... Read More

Identifying the Right Venture Capital Firm Partner

Venture capital firms are comprised of individual partners. These partners... Read More

Near-death Experience is the Mother of Invention for Two Dallas Electricians

To morning commuters, the hulking truck encircled with barricades and... Read More

Why I Should Go In To Business

Rohit Kochgaway was very upset with his boss for his... Read More

Work On, Not In Your Business

Are you busy? Everyone's busy! Ask anyone they'll tell you... Read More

Coating Service Business Case Study

There are many coating businesses in the market today, but... Read More

led garage lighting dimmable led bulbs Pete's produce ..