Examining the Consequences of Risk Taking as a Business Owner
When it comes to operating a business, you might discover the opportunity to take a risk that can potentially benefit your company. However, risks can be equally damaging to a business as they can be profitable, regardless of whether they're big or small.
You may have gauged the consequences of taking risks before when it came to your personal life, but there are a few extra things to consider when it comes to accepting a risk for your beading business. For instance, your employees are in jeopardy of losing their jobs and source of income if your risk sinks your business.
Because a wide variety of people can be negatively affected by your decision to move forward or pass on such an opportunity, a certain amount of brainstorming needs to be done before making a decision. It can be nerve-racking to think of the possibility of doing more harm than good for your business, especially if this is your first start-up company. However, there are a couple of factors you can mull over to make the process simpler. By taking your time and exploring all of the potential consequences, you can ensure that you're making the right decision for your business in the end.
1. Be mindful of your financial situation
Bankrate.com reports that many entrepreneurs are often oblivious to their cash flow. Rather than sitting down and hammering out the solid numbers, it's not uncommon for business owners to guide themselves with mere estimates once things get too busy. However, failing to stay on top of your cash flow can result in financial ruin for your business, regardless of whether you're thinking about taking a risk.
"Calculate every month how much money you have on hand and how long it will last if your income dries up. Also evaluate monthly your total accounts payable and the number of days accounts are outstanding because a slowdown in accounts payable will lead to cash-flow crunches," Scott Lovingood, the CEO of a small business consultancy, told the news source.
2. Avoid irrationality
Although this seems like a standard rule when it comes to risk taking, American Express' Open Forum reports that irrational behavior is the cause of many small businesses failing before their prime. This is because entrepreneurs get caught up in the idea that they need to take advantage of an opportunity immediately before it "passes them by."
There is one rule of thumb you can take into consideration if you're wondering whether to dive head first into a risk--if the opportunity is too good to be true, it likely is. This means that if it's something you're seriously considering, you should spend an ample amount of time mulling over all of your options before making a final decision.
3. Don't forget what you already have
Many entrepreneurs take risks because they think that they will better their business, but the fact of the matter is that many risks don't need to be taken at all. One way to help you make a decision when it comes to a big opportunity is to think about the current state of your business.
Don't just think about all of the positives that could come from taking this risk--think about what you already have. In some cases, you may come to find that you don't need to make any changes to your beading business at all. If this happens to be the situation that you are in, you might want to put the brakes on making any alterations and continue to do what's working for you.
4. View your business long-term
One way to make sure that you're doing what's right for your business is to view things long-term. This means taking into consideration what would happen to your company in the coming months if you do or don't take advantage of the opportunity in front of you.
Open Forum reports that if you're willing to pass on several small, short-term opportunities that come your way with large risks, you are more likely to find better long-term deals for your business in the future. Regardless of whether or not this is true, you should always be thinking ahead to the future as an entrepreneur.
Because there are many people who can be affected by your decisions as a business owner, it's important to take your time when it comes to making all types of decisions--everything from risks to how you want to ship goods out to your customers. These precautionary measures can also help you gain respect among other industry experts and your colleagues alike.
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