So you are in a secure job, but are feeling restless and are considering taking the plunge into the uncertain world of self employment, or maybe you have lost your job and are considering investing your precious savings in a new venture.
Alternatively, you may be a serial entrepreneur who is familiar with the process of risk assessment for start ups.
Whatever your profile, you will carry out some kind of risk assessment. You already know that you cannot avoid risk so the question is whether you have a good risk assessment framework.
There are two principal reasons for undertaking a risk assessment, namely :
– To help you with making your ‘go/no go’ decision. A thorough risk assessment, is a way of grounding the proposal and will limit the number of surprises later, and
– To help you devise a strategy to mitigate the risks as much as possible, to limit the impact of possible downsides. The availability of realistic risk mitigants, and a Plan B if things don’t go as expected will also influence the ‘go/no go’ decision.
1. Self assessment. YOU are the biggest risk to your start up business. Self employment is not for the faint hearted. Do you have sufficient passion and commitment for the new venture ? There also needs to be some degree of alignment between your background, skills and personal traits (including appetite for risk) and the new venture.
2. Downside risk assessment. What is the worst that can happen and how will it impact on your life? The older you are the less opportunity there will be to start again.
3. Do your homework. You will need to talk to a lot of people to ground the proposal and to validate your assumptions about the nature /potential of the opportunity. Don’t ignore inconvenient facts.
4. Be prepared to walk away. If you have a sunk cost in terms of financial outlay and time spent on research there can be a temptation to press ahead even though some inconvenient facts come to light at a late stage.
5. Don’t expect to eliminate uncertainty. If you are by nature risk averse, and we all are to some extent, you may miss the opportunity, in an endless search for an unattainable level of certainty.
6. Consider a staggered launch. Test the market before fully committing as a way of managing risk.
7. Listen to your intuition. Not all risks are quantifiable and sometimes you just have to back your gut feeling.
8. Get a mentor/coach/adviser. There is a lot of support available to start up businesses so don’t be slow to avail of it.
In most cases when it comes to the ‘go/no go’ decision there will remain a lot of uncertainties, and depending on your appetite for risk taking it will still require courage to take the plunge.
Remember that the alternative ‘the do nothing option’ also has risks. The secure job that you are reluctant to leave may not be as safe as you think.
Self employment provides a great opportunity to create your own future, rather than risk having it determined by someone else….but it is not for everyone. So ‘ know thyself ‘ !