It’s easy to take risks. People take risks all the time, and business is no exception. But, for all of the well-known entrepreneurs, there are many who take too great a risk, only to fade into insignificance, never to be heard of again.
Whilst many talk of risk-taking in a small business, it’s still the case that, at times, if you want to grow a strong and sustainable business, it pays to play it safe.
It’s undoubtedly the case that there are profitable companies that go bankrupt. This is usually because of a lack of cash flow.
Of course, eventually (and hopefully sooner rather than later), you need to make profit. Whilst it is legitimate to focus on growth and market share in the early stages of your company, what you can’t do is run out of money to pay your employees or your creditors! So, keep a careful eye on cash if you want to survive.
Many entrepreneurs believe it’s just a case of marketing their products or services aggressively in order to guarantee success. Sadly, marketing is as much art as science and can be a fickle animal. So, although it is absolutely necessary, focus first on the marketing activities that deliver a more tangible return on investment.
As an entrepreneur you’re probably an optimist. However, don’t let this optimism cloud your judgement. The thought of running out of stock and losing sales opportunities will naturally keep you awake at night. But so should having your much-needed capital and cash tied up in a storage bay. Make it work for you and adopt the Japanese-inspired method of Just In Time production and delivery.
Clearly, if you want to survive, you should never let your products or services be improved by your competitors. However, you can’t always be at the cutting edge that you never enjoy a period of profitable established sales. Find the balance that’s appropriate for your business.
Ensure you look ahead and be prepared to capitalise on opportunities. However, hiring too far ahead means that you’ll incur heavy costs without the necessary return.
Without doubt, there’ll be times in your small business that you’ll need to take leaps of faith. However, it’s worth remembering that, at times, there’s value to be found in consistency and conservatism. After all, you don’t always need another hero…
About the Author:
Heather Foley is a consultant at etsplc.com