(By Ritika Puri)
“There is no way for an entrepreneur to make a living without taking risks, the bigger the risk, the more profit. More specifically, an entrepreneur needs to understand a problem so well that everyone else sees more risk in its solution than the entrepreneur.”
Becoming an entrepreneur is a gamble—on yourself, your idea and your team. After taking the plunge to pursue your own business, the fear of failing can cause you to avoid further risks like testing a new market or borrowing additional capital. But risks like these are integral to building a successful venture, and overcoming your fear of them is a vital step toward growing your business.
Don’t let risk hold you back and cause your business to fold. Instead, manage your emotions by following these practical steps:
Step 1: Embrace risk as part of a job
Mark Organ, founder and CEO of marketing software firm Influitive, started his first company when he was just a teenager. Before founding Influitive, he was the founding CEO of Eloqua, another marketing software giant. As a serial entrepreneur, one of the biggest lessons Organ has learned is that entrepreneurship will always be risky.
“There is no way for an entrepreneur to make a living without taking risks,” Organ explained. “The bigger the risk, the more profit. More specifically, an entrepreneur needs to understand a problem so well that everyone else sees more risk in its solution than the entrepreneur.”
This attitude helped Organ grow Eloqua from a start-up to an industry-leading company in just seven years. In 2012, Oracle purchased Eloqua for $810 million.
“For me, building a business is a systematic process of understanding and mitigating risks,” Organ said.
Step 2: Dig deep into the market
Organ explained that one of the best ways to manage risk is to cultivate a deep understanding of your market.
“I spend a lot of time on the road talking to customers and prospects, observing users, and learning about new disruptive technologies that could affect my product,” Organ said.
“When you hear from enough customers how much they want a particular feature, how much they value it, and the lack of acceptable alternatives, it sure makes it easier to risk a few engineering cycles on a new prototype.”
This type of research is important for avoiding costly mistakes down the road. If you know what your market wants, you can avoid losing money on products, services and features that may fall flat with your audience. By understanding your customer base and assessing your product-to-market fit ahead of time, you can minimize your chances of loss.
Step 3: Be smart about liability
When you start a business, you expose yourself to legal risk. Consulting with an attorney is the best way to identify those potential liabilities and learn how to avoid them.
Work with a lawyer to understand the specific legal risks of your industry and particular situation. This awareness can help you take precautions like forming an LLC, purchasing liability insurance, and conducting a trademark infringement or risk audit. The specific solutions will vary between businesses, but an expert can help you navigate this journey.
Step 4: Start your business while still employed
Cash flow is a major pain point for most new business owners. One of the simplest ways to mitigate the financial risks of starting your own venture is to launch your business while you’re still employed elsewhere.
“Block out nights, mornings and weekends to build the business until you have enough orders to cover 50 percent of your salary,” said Dan Martell, the serial entrepreneur behind Clarity, a platform that connects experienced leaders with new business owners. “This might mean 7pm-11pm most nights, and four hours on Saturday and Sunday. Make progress and build momentum.”
Some additional liability issues can arise from this strategy, so ask your attorney to review the terms of your employment contract. It’s important to make sure that your current employer can’t claim ownership of the work you’re doing on your new business.
Don’t let risk scare you
Overcoming the fear and uncertainty that accompany entrepreneurship is critical for building a successful business.
“The best advice I can give to entrepreneurs is to embrace risk by understanding it [and] to use risk to your advantage,” Organ said. “Entrepreneurs should look for every opportunity to offload risk from the customer onto themselves—and charge a healthy premium for the service.”
Source: Sage Voice, Forbes