Tag: risk

Categories
Strategy

Business Risks: 5 Types of Risks All Firms Should Know to Avoid Losses

Business Credit Score| Representational image (Photo Credits: Pixabay)
Business Credit Score| Representational image (Photo Credits: Pixabay)

All the businesses are prone to certain risks. Various uncertainties related to the micro and macro environment in which a firm operates pose as a constant threat to the enterprise. Business risk is the exposure an organisation has to elements that can potentially lower its profits or lead to firm’s failure.  Anything that threatens a company’s ability to achieve its financial goals is considered a business risk. There are many factors that can converge to create business risk. Though certain risks cab be mitigated by continuous analysis of the business environment, complete elimination of the uncertainties is not possible.

Business risk is influenced by a number of different factors including, consumer preferences, demand, and sales volumes, per-unit price and input costs, competition, legal and political factors, technology among others. Here are five types of business risks every business should be aware about –

10 Lakh महीने तक कमाओ | Low Investment | Business Idea | Dr Vivek Bindra | IBC

Economic Risk

One of the biggest risks a business faces is the economic risks. If the economy does not perform well or goes in recession, all the sectors will suffer. An economic slowdown directs hits the profitability and productivity of the businesses and even lead to closure of various firms. It’s important to watch changes and trends to potentially identify and plan for an economic downturn. To deal with a sudden economic downfall, all the businesses should keep funds in reserves and maintain a steady flow of income. Firms should also be careful while planning budgetary expenditures.

 Compliance or Legal Risk

Another constant looming risk is the compliance or legal risks. Governments have the power to change various legal provisions overnight, including introduction of a new tax, scrapping an old licence, revising the existing regulation rules. Business owners face an abundance of laws and regulations to comply with.  The businesses should carefully follow the existing laws and keep a watch on any new regulation by the government. A failure in complying with all the rules might even results in closing of the company.

Operational Risk

Not all the risks arise because of external factors, sometimes internal uncertainties can also lead to disruption in the business’ functioning. Such risk which originates within the organisation and tends to disrupt the business operations is known as the Operational Risk. It might involve a server outage caused by technical problems, people, or power cut. Many operational risks are also people-related. An employee might make mistakes that cost time and money. In order to reduce such risks, the business should resort to proper planning and continuous assessment.

Competitive Risk

Another type of risk that all the businesses face is the competitive risk, the advantages competitors gain over the firm. In order to survive in the market, all the firms should have an edge over the competitors. A firm faces continuous challenges from its competitors. It should be careful about how its rival firms are performing and garb the market opportunities before others, gaining the first mover advantages.

Goodwill/Reputation Risk

Goodwill aids in long term survival of the business. A positive image of the firm helps in growth and expansion. However, one wrong decision or spread of a rumour about the firm and the entire reputation is lost. If the public conceive a negative image about the firm it will directly impact its profitability, sales and valuation.

Risk and uncertainties are a part of the business cycles, however firms should try and mitigate the potential loss arising from various risks as much as possible to stay afloat in the market. Knowing and being aware of the several risks is the first step in ensuring a healthy business.

 

 

Categories
Business motivation

5 Steps to Help You Become a Successful Entrepreneur

Entrepreneur
Entrepreneur (Photo Credits: Pixabay)

Mumbai, November 18: Being an entrepreneur is not as easy as it sounds. Most people want to start their own company because it gives them a sense of freedom and empowerment. You can take your own decisions and implement them for the wellbeing of your own company.

However, even though, it sounds fancy, but there is a huge responsibility that comes the moment you start your own business.

Here are a few steps to follow in order to become a successful entrepreneur: 

Trust yourself: The first and foremost quality which an entrepreneur is required to have is to have great trust in one’s decision and capabilities. However, this shouldn’t be confused with overconfidence.

Believe in the people around you: It is very important to stand and believe in the people around you, like your colleagues, workers and others who are the pillar of your company. You should always believe in them, this gives immense confidence to their belief and they will stand by you, even when times are not good.

Be Passionate: You should be extremely passionate about what you are doing. The moment you love your work, everything falls into place.

Take Risks: Taking risk is another quality which entrepreneurs should have. If you have launched your own company, you need to make decisions sometimes without worrying about failure.

Identify your weakness: It is very important to identify your weakness and this will be the base where you can work on and improve. Listen to complaints and understand what the customer is saying. Try to be in their shoes and then analyse the problem.

Categories
Startup

5 Questions to Ask Yourself Before Starting Your Own Business

Startup
Startup (Photo Credits: Pixabay)

Mumbai, October 16: Often people want to start their own business because they feel they have a great idea. We don’t want to discourage anyone but would like to remind that starting a business is not a cakewalk it requires a lot of crucial planning in the backend.

Here are five questions which you need to ask yourself before starting your own business.

Try to Have a Unique Idea

The first and the foremost to any business is to have a plan for your business. Your idea should be unique and something which the customers want. Don’t try and launch something where already 10 players are fighting with each other. If you have an idea, keep your customer in the centre of it and think aloud that how will they be benefitted.

Do Adequate Market Research 

It is very important to do market research before you think of launching your product in the market. Understand if there is a demand for your product and then analyse your competition. Try and find out how will your product be different from the others and why should customers choose you.

Compare the Risks Vs Rewards

It is very important to analyse the risks associated with starting a business in comparison to the rewards which you may get to see if the business becomes successful. For e.g you may have a lucrative career, earning a handsome salary and thinking of quitting your full-time job to start your business. There are no doubt huge challenges and risks associated in the initial few years, so are you ready for it?

There can be two sides to your wanting to start a business. One being your idea may not kickstart and second, it may become huge and a successful venture.

Strategise a Plan

It is very important to plan and plan well if you want to start your own venture. Remember everything is new and will be in limited resources. Right from the budget to the people whom you will be able to hire to run your team. You need to spend every penny wisely. Crisis doesn’t come knocking at the door, for e.g. no one knew at the start of this year that the COVID-19 pandemic will lead to several businesses getting shut and people losing their jobs. Therefore, it is very important to plan for a time when things will not run smoothly.

Do you have the money?

Finally, do you have the money to start a business? Are your finances in place? According to a Forbes report, most startup founders use their personal savings to fund their businesses. It is therefore very important to not remember not to drain your bank account to raise funds for your business. Entrepreneurs should set aside enough living expenses to last them for a year. Most startups are not profitable for months after opening