When you start your entrepreneurial journey, you know that risk is everywhere. You are bombarded with risk forces from inside and outside your company. Some of them can be controlled by you, but some of them merely happen, and you can not do so much to escape them. It’s something that can defeat even the best business models and plans for your future as an entrepreneur. Simply you need to focus on managing the risk around you.
Because of this, there is not an entrepreneur that is not putting their focus on minimizing and neutralizing risks from inside and outside their companies. Today it becomes really simple to predict the possible risks and prepare to minimize their effects on your work.
Your entrepreneurial success in most parts will be based on how you will succeed in managing risks related to the operations of your company.
How quickly you will achieve success will also depend on the ways how you manage risks around you.
The question is, how can you achieve fast success with your small business? There is a simple formula that I always advise entrepreneurs to use. The formula for success is the following:
Let’s see what each of these elements means for you and the process of managing the risk you are using.
1. Ideas (Creativity)
Creative persons will always have exciting ideas. As you know, your business is based on your ideas, on your creativity to find the right problems on the market and create business opportunities.
Some ideas are low-risk ideas, and almost always, they are with the smallest business potential energy for your financial success. Also, you can have high-risk ideas that, if you succeed in implementing them, you will achieve much better results measured through financial indicators.
So, your risk management process will need to cover your business ideas generation process. You need to analyze your ideas and classify them according to the risk you will need to take to implement them. When you have quantitative data related to this, you can easily compare them with the opportunities you will have if you implement the specific idea.
2. Decision Making
You will always need to make a decision as an entrepreneur. But, here, I want to talk about two important things when it comes to your decision-making process: feedback and information/knowledge.
If you want to become successful in managing risk when it comes to your business operations, you will need to have a systematic approach to the improvement of your execution. That means that the outcomes from what you have done will need to be measured and used as a basis for the decision-making to eliminate or minimize the risk in the next execution cycles.
For example, if you start implementing some project as a result of your business ideas generation process, you will get some feedback information related to the outcomes of your activities. You need to use this information to align the execution process according to reality.
When I work with a client to improve their execution processes inside the company and minimize the risk of failure, the first thing we implement is to have a clear, systematic approach to measuring what they achieve after each task they complete. In such a case, we usually need to develop processes, internal procedures, and documentation that will be used when the process is in execution mode. So, everything is recorded, and when it is recorded, it is easier to be measured. When we have quantitative measures, we can make the right decisions to succeed in the execution process and eliminate or minimize possible risks.
Right Information in the Right Place (Information/Knowledge)
To support the right decision-making process when it comes to managing risk, you will need to have in place a system that will bring the correct information to the right place always when you need it.
For example, if you are an online trader, you will need regular market reports, indicators, FX tools, charts, import and export indicators, historical data, specialist analysis, etc.
3. Doing Things (Productivity)
In the first step in achieving success, we talk about the vision in the form of ideas and your entrepreneurial creativity. There you simply generate ideas and want to check what will need to be done in the future. Doing things is the second half of your entrepreneurial journey, which we call execution. Without execution, there are no results. And when you do not have the results, you can not say if you have achieved or not achieved success in something.
Again, here you will have many risk sources that will need to be managed if you want to succeed. When we talk about doing things, we talk about two important things:
- Effectiveness – to do the right things. This is an essential part of the execution process. What if you don’t do the right things in the implementation of your ideas? What if you select the wrong ideas to be implemented? There are many what-if questions here that, on the other side, are related to the risk sources.
- Efficiency – when you do the right things, properly do them. As you probably know many things that you are doing can be done in different ways. Is the way of doing things the best possible way? What if you don’t do things in the right way? What if you don’t have a team that will do things the right way? Again, there are many questions that you can see as possible risk sources.