What is Risk Management?
It is basically taking risks for your startup in a controlled environment. So, when you take the risk you have got a backup plan to cover fire in case you run out of ammunition in the war zone (market). This is known as Risk Management in the world of startups. I will provide a brilliant example.
A person just started a small business of mobile accessories online. He knows there is enough market out there already that he needs to compete with to outreach his customers. So, before getting into the game he needs to understand that his product is unique and cheap at the very same time. Now, if the product is cheap; how can it be unique. For this particular purpose he needs to visit whole sale markets. When he finds what he needs, next step is placing a bulk order. Now, when he is selling his item online; he will get customers sooner or later. But, what matters is he took a risk placing a bulk order; at the same time he did research for uniqueness and price control. This is what exactly known as Risk Management in the world of startups.
Any start up in this world fails only when it runs out of a credit line. So, it’s completely clear that money is the lifeline of your startup. What needs your attention is Risk Management to check on the expenditure? How can you do that?
1) STOP SPENDING STUPIDLY:- You are not here to impress your girlfriend on a date. Don’t be a show off no one needs to know your spending capacity. Your clients are only seeking some brilliant product packaged with good services. They are not here to see your costly machineries, your heavily salaried employees and your mind blowing infrastructure. This is a big NO. It’s the beginning phase; focus only on good products, good services and amazing marketing. That’s all you need.
2) Don’t run with a blindfold on your eyes:- Another stupid reason for a startup failure is when you keep spending in the wrong product or services without seeking the market survey report. Why? You could lose a big fortune of money that’s why. Your customers are looking for something else and you are not ready to see that with your open eyes instead you choose to cover your eyes like a horse and run straight. Look around understand your market don’t get intimidated by a product or a service you like. Understand what the market needs, the customer’s demands and work accordingly.
I am not saying don’t take a risk. I am just saying don’t take one without a plan.