By: Rading Biko
There is a saying that running a business is like managing own family. The same way one struggles to ensure that his or her family is comfortable is the same way one strives for profit in their businesses and always trying to ensure less risks.
Paul Ouma a senior lecturer at Strathmore Business School enlightens us on how entrepreneurs can avoid risks and gaining their profits.
According to Ouma, business innovation calls for a willingness to even risk failure. For instance when Coca-Cola introduced New Coke, it incurred a risk that it ultimately discovered would not be the rewarding change it initially anticipated.
The same applies to entrepreneursn who are more likely to take even greater risks than large companies.
So what are some of the measures that entrepreneurs can put in place?
One should understand the Business Regulations
As an entrepreneur, one should indeed make sure that their companies are aware of all relevant laws that apply to your business operations. Failure to adhere to these business regulatory violations can prove costly.
Paul advises that they can also be easily avoided with sound compliance information that is incorporated into all core business processes.
Risk based research is vital
In this era of internet, entrepreneurs should engage in risks based on sound research. For most businesses, information is the best shot you will have over your competitor. Securing key information later than your competitor, can translate into an opportunity lost.
Seek advice from suppliers
With many online shops across the board it’s easy today for one to get relevant information on different suppliers.
The Suppliers and vendors are industry players in your supply chain and not your competitors. They are also exposed to different sources of information and may be willing to share details with your organization related to areas such as new industry technologies or potential changes in the regulatory climate that may affect your business.
Focus on Core Processes Regularly
As expert will put that every business has its own challenges and once an entrepreneur fully understands them the better for the business
Although risk and uncertainty cannot be eliminated, they can be reduced with information.
Entrepreneurs are advised to audit core business processes a systemic part of their operations as this will allow them to catch operational risk patterns before they escalate into substantial threats.
Learn from the Mistakes and Successes of Others
They say experience is the best teacher and we tend to learn from other people’s mistakes .
The same way we learn from people’s mistakes in life to better our lives is the same way entrepreneurs are encouraged to learn from their mentors, business associations and the study of industry news offer the entrepreneur valuable insights into internal and external risks. Business case studies, for example, can help one to identify predictable surprises in their own organization.
Tap into your team strength
Team work is the best remedy of success in every business, whether the CEO is a Phd holder they still needs the strength of that certificate staff holder in the company.
Encouraging creativity and innovativeness in organizations is always a special challenge but entrepreneurs are urged to tap into the skills of every team member.
Through creation of a business environment that encourages staff members on all levels to contribute their knowledge to the business then the business bound to prosper.
Perform Cost-Benefit Analysis
Entrepreneurs should integrate cost-benefit analysis into the risk assessment process. This involves comparing the potential cost of non attention to each identifiable risk. While knowing the outcome of each alternative risk with certainty is not possible, probabilities can be assigned to each outcome.
Have Risk Insurance Policy
Most entrepreneurs tend to argue that there is no need for an insurance policy for their businesses since their companies are still young but the truth of the matter is that the cost of potential risks can be mitigated through insurance policy cover.
The type of insurance that a company requires is based on the type of business it is.
Entrepreneurs are a very instrumental part of our society. Nothing should be taken at face value.