Eliminate Risk

Self employment is risky.  We hear that said many times, it is usually the first thing that comes up for those who are thinking of starting their own business.  Let’s take a minute to see what risk is and how to eliminate it!

Risk by definition is the chance of suffering harm or loss and the uncertainty of all of this unknown.  Instead of worrying about how you can handle risk, worry about the best way to reduce risk.  The best way to reduce risk is to plan how you are going to eliminate the possibility of loss or harm occurring.  The more you know the less risk you have.  So how do you plan to eliminate risk?

1. Create a list of all possible risks for you in starting a business.  This can include income, time away from family, start-up costs, location, experience – you name it if it could be a problem for you put it down.
2. Study your personal situation, how long can your finances make it?  Do you have the traits to be self employed?
3. Your prospective businesses chances – try many what if scenarios, not just one best case scenario.  When doing a plan do a best, good, bad scenario and know what to do to handle the business during each scenario. 
4. Talk to others about your feelings about going into business for yourself.  Many times talking through issues and having a person as a sounding board is very beneficial!  At the least journal about them.

Planning eliminates lots of risk and makes you more comfortable with the steps you do take!  Don’t sit on the sidelines because of risk, make a game plan and start playing!

Is there Really Risk in Self Employment?

Is there an element of risk in self employment?  Yes!  Do you have to be risk tolerant to be self employed?  NO!  I know this goes against the grain, but risk tolerance is so specific to the person and circumstances that it cannot be labeled as a must have for self employment.  You cannot answer the question “can you handle risk” and know if you will be good at self employment.  I am going to take three areas that are typically considered risky and look at how these might not be risky.   

 Income is the most common risk that I hear people talking about.  The risk from this is usually associated with lack of a regular income.  It is risky to not have a regular flow of money coming into your bank account.  I would agree to this but let us look at how it might not be a problem.  Do you have a spouse that earns money and you can live on their income only?  Can you start your business as a part time gig until it takes off and then quit your day job?  Can you save enough money to live for a year without needing additional funds?  Did you get an inheritance that you can use to live on?  These and many more can make income not risky.

I also challenge you to view income risk from your current position.  Are you on commission?  Is your company stable?  Is your department or even specific job stable?  Our daily work lives are much more unstable than we allow ourselves to think about.  At least with owning your own business you control the income risk by how much you work on getting your business up and running!  Plus you always know what is going on and can plan accordingly! 

Start-up costs are another risky area for a new business.   Signing personal loans, running up credit card debt and mortgaging your house are all highly risky ways to start a business.  When I hear an entrepreneur say they have put everything they have into their business warning bells go off!  This is not only risky but stupid.  I challenge you to play with the idea of no loans; use your own money for start up costs and only use what you can afford to lose.  Then you control your risk and will not be stuck with the loan payments after the business has closed.  An added bonus of eliminating this risk is that you will make your decisions slower because it is your cash, which typically leads to better decisions!

Risk number three is that the startup might fail.  This would leave you in the position of having nothing left and you would need to look for a job.  Yes, but your current job could be eliminated and you would need to look for a new one then also.  Having nothing is also relative.  Were you smart and did you not jump all in with everything you have (see start-up costs above)?  You should still have your family if you lead your business with balance, and you still have yourself.  I believe the biggest issue here is actually that if the new business fails then your ego takes a beating! 

To me this last risk which is really more of an emotional one is the true risk in business.  The emotional rollercoaster that you put yourself on becomes the hardest part to survive because it is the hardest part to plan for, and is a whole different article!

Don’t get me wrong, risks are everywhere, life itself is risky.  But risk is all relative to the choices you make and how you plan to manage for those risks.  Risk by definition is the chance of suffering harm or loss and uncertainty.  Therefore the best way to reduce risk is to plan different ways to eliminate the possibility of loss or harm occurring.  Don’t make risk a reason to not start a business; because once you consider all the realities and plan accordingly the risk in business is small and controllable.  Don’t let risk make you not consider self employment!

Business Recycling

This is definitely out of my range of normal writing, but it has been on my mind a lot lately so I wanted to get it off!  Why do more businesses not offer recycling bins? 

Maybe it is because I am in the Midwest, maybe it is because the pickup service is not offered to businesses, or maybe it is because businesses just don’t want to implement a program.  Whatever the excuse, I believe it is worth adding, even if that means that the businesses have to push their disposal vendors to add that service, or if they have to buy new bins and train employees.  I believe it is worth it, and that customers would probably be happier about shopping at those businesses. 

I personally hate to see the waste and actually stop to decide if I can manage to get the trash home for recycling.  It would be a lot better if I could just recycle right then and there.  Whole Foods has a great program for recycling and more business should learn from them!

If we can do it at home why can more businesses not do it?  If you own a business, PLEASE consider adding recycling.

Adding Customer Service to local business

Recently while at a local coffee shop I began contemplating customer service due to the bad service I was receiving – actually it started with anger, but eventually that turned into contemplation!   Specifically, how can small local stores offer worse service than a large corporate conglomerate would offer?  Isn’t it supposed to be the other way around?  I thought corporate America did not care, and that local small business was there for us the consumer?  So how is it that many of these large companies provide better service than our mom and pop stores? 

After much pondering I concluded that the key is training.  The larger companies have an entire staff dedicated to training and customer service.  When a new employee starts they do more than just toss them in.  They get more training than here is the register call if you need anything.  Now don’t get me wrong having a training program does not eliminate the chances that a store will have bad customer service, but it does give them a leg up, a better chance to make it!  So how do small businesses compete?  I recommend starting with three areas: procedure manuals, staff training, and empowering your employees. 

Procedure manual?  Why should you take the time, which I don’t have, to write a procedure manual?  A procedure manual is a great way to ensure that the way you want your business run is somewhere other than your head and is available to your staff.  Then if you are not around they can refer to it if they have questions.  In addition it enables you to walk through all the what ifs that can occur in your business, forces you to think about what exactly you want your business to be and how it is going to get there and makes your business run smoother because everything is mapped out.  Training will be based on your procedure manual.  It gives your employees a sense that they have the knowledge and skills to do their job right!  

Don’t let your training end at their first week of work!  The second item I recommend is training – all the time!  If you continually provide them with extra skills, such as customer service classes, leadership classes, or even history classes on your industry!  Not only will they provide better service, but they will feel you are more committed to them and their success.  The extra costs will be more than made up in lower employee turnover and happier customers.  Most companies do not provide their employees with the skills to succeed,  make sure you are a step ahead!  

Finally, empower your employees to solve problems and make customers happy.  Not every situation you will be able to put into your manual or will your staff take the time to learn about every issue that might occur.  So instead, include in your procedures manual a clause about minor adjustments, set a limit on cost, to make customers happy.  If your policy is to serve a drink in x cup and the customers wants y cup, let your employees make that adjustment.  You will have happy customers and employees because problems can be solved without you! 

Don’t feel overwhelmed by how long implementing all this will take.  It will not happen overnight, but start working on it and you will be amazed at the results!  Set aside 30 minutes a day to write and develop your programs.  Find templates you can adapt, send your employees to already established training seminars.  The most important thing is to just get started.  Your business will thank you!