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You’ve come up with a great idea and want to turn it into a great business. What’s next? Learn more about what it will take to get your business up…

How do I deal with the risks associated with starting a business?

Starting and operating a business involved many risks, but also many rewards. Follow these tips to reduce the risks and ensure your business is on sound footing.

Things to do:

  1. Start a business you enjoy.
  2. Overestimate your operating costs. It will be difficult to get another loan or a larger line of credit later because investors might assume you didn’t do your homework thoroughly the first time.
  3. Know your market and your competition.
  4. Owners should pay themselves a salary they can afford. It may not be as high as desired but it should be adequate.
  5. Never take the public for granted. Make service, integrity and honesty high priorities.
  6. Establish and maintain an ongoing relationship with your banker. Always be on the lookout for sources of capital for future growth.
  7. Assess the company’s credit policy carefully. Realize that some customers won’t pay on time and some won’t pay at all.
  8. Get professional help in preparing the business plan and cash flow chart.
  9. Owners should hire people who have different skills, abilities and characteristics from themselves.
  10. Define each employee’s job and make sure everyone understands his or her obligations. Be willing to delegate.
  11. Spend time researching and choosing a location.
  12. Join clubs and associations for new businesses and muster support for your new enterprise.
  13. Define your business goals and establish a time-management system.
  14. Solicit the help of family, friends and colleagues.
  15. Keep up with industry news by taking courses and by reading industry magazines and related publications.

Things not to do:

  1. Base the decision to become an entrepreneur solely on the ability of a venture to make money.
  2. Pretend there are more start-up funds than you really have.
  3. Assume that because your product or service costs less than your competition, people will flock to your door.
  4. Pay yourself a salary that exceeds the salary received while working for someone else.
  5. Expect customer loyalty before it is earned.
  6. Communicate with the bank only after running out of money and managing cash flow on an ad hoc basis.
  7. Spend working capital down to the last dollar, expecting that people will pay you in time to cover your expenses.
  8. Hire people who share your background and entrepreneurial ambitions. Hire a friend’s friend or hire solely on the recommendation of another person.
  9. Give employees no decision-making authority. But, if anything goes wrong blame them!
  10. Rent expensive office space to impress your clients.
  11. Assume that success was achieved independently and the support of friends and colleagues is no longer needed.
  12. Assume that no one will know or that it does not make a difference if laws are obeyed.
  13. Try to do everything yourself (no matter how much energy you have or how clever you may be).

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