One big obstacle for entrepreneurs is the lack of capital; they simply don’t have the money to start their business. Another significant obstacle that people face is fear. I am talking about people who either have access to the required capital or know where they could go to secure it with a reasonable effort; however, they don’t due to fear of failure. The word is “Risk”. People have a business idea and the money, but are worried about the consequences of failure due to the level of risk involved.
The Role of Business Plans
If you utilize one of the many templates for business plans out there, you will most likely not be addressing the risk involved with your business idea. Most business plans strive at telling investors how great the entrepreneur is and how exciting the idea is. The plan will talk about market potential of the venture while painting a rosy picture of the future. If done right, the investor or loan officer buys in and the money is provided.
At Crucial, we believe failure to plan for risk is a plan for failure. Prior to writing the plan, the entrepreneur needs to list as many risks they can think their business may encounter, followed by how likely is this risk to occur and what level of impact will this have on their venture. Risk is not necessarily a bad thing or a good thing, but something that was not expected. For example, what would the owner do if their truck breaks down. This could sideline their ability to conduct business. But what if the business underestimated demand and customers are knocking down their door for either product or service? It sounds good, but if the owner doesn’t have a way to meet the demand it could damage their reputation if they can’t fulfill their needs. Both of these scenarios should be evaluated and planned for if there is a reasonable chance of occurring.
Getting it Right
When an entrepreneur sits down and analyzes the risk involved in their proposal and plans for how to handle each risk that has a reasonable likelihood of occurring, they increase their chances for success. A business plan needs to contain a risk plan to properly prepare for the bumpy road ahead. Please remember very few entrepreneurs make the statement, “It was a lot easier than I thought it would be to start my business”
Bottom Line
Identify and plan for risk and you will increase your confidence in starting your business.
It is the value of properly planning your business that business planning delivers, not simply the fact that you have a business plan. If you have an idea and want to explore starting a business, then talk to us at Crucial. One conversation with us and you will know why you should work with us to make your idea come to life. www.wearecrucial.com