Creating A Successful Business Is Not About Taking Risks It's About Eliminating Risk
You may have heard the entrepreneurs are risk takers. But what may not be discussed is that successful business people are risk eliminators.
Every business has risks. There is now way from avoiding some risk but there are ways to reduce risk, and in some cases (depending on the business type) eliminating it totally.
Let's give you an example of virtually eliminating risk. Let's say you work a full time job and you locate a great product that you want to market on the internet. So you start off selling them on eBay (which is a great low cost way to market products).
But to minimize risk even further, you find a source that will supply the products to you and will drop ship them (I.E. they ship from their stock and location) so that you don't have to maintain an inventory (which would involve investing money, time and storage space).
Your only risk at that point is your time that you invest into the marketing and the eBay listing fees that you spend to advertise the product.
For other types of businesses, the path to eliminating risk to ensure you make money may not be as easy to see.
Back when I started my first company (after being laid off for the fourth time) I asked two self made millionaires to help point me in the right direction.
What advice did they give? The most important advice was "What is your back-up plan". When I finally had one and explained my plan to them they said "And what are you going to do if that does not work".
In other words ... it's all about planning ... creating a business plan that lowers your risk of failing because you have many alternative paths you can take, and in some cases reducing the financial risk, or investment capitol you need to put up to start the business.
You may have heard the phrase "people don't plan to fail they fail to plan".
I will leave you with an example to think about.
A few years back I read about a company that wanted to start up their own local (regionalized) brands of beer. So they put together this grand business plan and then approached a venture capitalist (VC). The VC insisted that they used an established beer brewery to brew and bottle the beer under their own private label and to their recipe.
That move turned out to take a huge chunk out of the investment risk (capitol equipment and plant space required to brew their product). The beer was successful and within a couple of years, they had their own brewery.
Now your first thought may be that it would be cheaper to brew the beer yourself ... but the real problem here is that it's risky to create your own brand and differentiate yourself from everyone else out there (I.E. marketing ). There is always time to reduce the cost after you are sure the product is selling and you are making money.
So when planning your new business venture, don't just look at the cost and go for the lowest cost so you make the most money. Look at your plan from reducing your business risk so that you reduce your chances of failing.
But most importantly: What is your back-up plan? What do you do if that also fails?
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