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Does anyone remember the story of this dare devil- the founder of Virgin airways? Yes, I’m talking about none other than Mr. Richard Branson. We always get to listen so much about him in social media posts, even motivational stories, etc. etc. But do you know the guy who is a source of inspiration for billion has seen a lot and has overcome a lot. Today he is the 4th richest man in the U.S. but contradictory to this, people are hardly aware that he is a major risk taker in his business. It is clearly evident from his business records that when he grew his brand by signing the most controversial acts of the time. He took these risks to gather some attention in this trafficked industry…But what has he made Virgin today? You know the answer…And Sir Branson is the man behind this successful venture.
I certainly feel that there a lot of obstacles in the world but if one has the locus of control and passion, then one can move mountains. Certainly, not as easy as we perceive; but not impossible.
Today the risk taking scenario has changed, and almost everyone undertakes some kind of risk to raise the bar. Be it Bollywood producer investing in difficult plots like Masan or The Lunch Box, or a bunch of friends going to a trek to Mt. Everest or launching of a new product, risk is involved everywhere. But risk taking has to be smarter rather than being reckless because it’s one of the key essential of an entrepreneurial process. And more than 60% believe that taking smart, calculated and planned risk is a good option to bring dynamics to business. There are a few examples of risk taking abilities which I can quote from what I read and discussed:
Ready to part with personal finances
It is very important that initial source of capital comes from the personal financing i.e. via savings, life insurance or fixed deposits. The personal finance. There are two types of risks involved: one is a pure risk and the other is a speculative risk. A pure one is the loss incurred owing to some event or calamity (i.e. money is lost) while in a speculative risk the money can be lost or gained money. In either way, one should be very clear that he or she should be able to part with his money.
Trust in the newly hired
Indeed a big risk! An entrepreneur is dependent on his man force for the success of his business and an organisation is not only a single man’s work but also a product of collaboration with others. This may require hiring people for various functions. The newly hired may be un-trained as seen in many start up requires. And moreover affording training may be beyond budget and time. Thus, allowing the responsibility in hands of newly recruited bunch and aligning them to the company’s vision requires some margin and risks.
Read more about – 9 Strategies to sustain your startup
Market risk – the consumer scenario!
If one is running an E-commerce business, one may need to identify whether the business is relevant to the market, if it is incompatible then it is difficult. One should know what competitors are doing. Like if Naptol plans its positioning they need to see what are Snap deal and Home Shop 18.
So you need to check these points- Do you have customers for proposed e- business planned already existing online? What does it require them to get online? Does it extend a cost? What is your plan for digital growth and presence?
Technology and operational risk
It broadly deals with the implementation and ease of doing activities & business. This risk throws innumerable questions such as – is it possible to select the product design with a limited allocation to R&D? Will the product work as intended? Can you provide with a proper support framework for product design and distribution? How will you firewall your start–up against cyber crime elements and hackers? Is there a Plan B to run the company if some major equipment goes due to calamity and accident?
When operation comes into picture there is no standardization or benchmarks, this creates a lot of variability in delivery so in order to prevent that one can gauge experience effectively and use it as a benchmark. One can learn from past experiences and the mistakes committed.
Legal and regulatory risks
Last but not the least, it is very important to pay attention to the legal and regulatory environment of the business. If you are planning to expand the business then you need to consider certain things compiled under Company’s act 2013. You might have to face numerous processes when it comes to a company as a legal entity, like tax complications, law suits filed by competitors, copyrights and patent issues, disputes arising from poorly agreement structure etc. Thus, you need to have the right attorney or law consultancy involved in the firm practices to provide effective guidance.
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So did I scare you? No don’t be!
What I learned during my MBA is paying attention to a seven element matrix that includes risk factor (judgemental), type (Categories of risk), Likelihood of risk , consequence, mitigation tactics, mitigation cost and status of risk after first six elements are adopted this is nothing but risk management plan.
Be a smart player, take calculated risk and nullify them with your resources. There you start your entrepreneurial journey!