When opportunity arises, many small-business owners must answer the key question: Is it worth the risk? Here are 3 ways to assess the situation and help decrease business risk.
The same risks may hold true in business. As the “coach” of your company, you may make decisions almost every day on whether or not to risk what you have now to put your business in a better position. For example, should you hire a new employee? Will they help you grow your business? Should you open a new location, launch a new product or enter a new market? Are you comfortable with the risk-reward ratio?
To answer these questions, you should do your homework. The better prepared you are to answer the questions, the better your chances may be for success. Here are three simple steps to help you assess each opportunity.
Have a Plan
I’m constantly amazed at how many small-business owners don’t have a legitimate plan to help them navigate the uncharted waters of business. In 2016, your company may come to forks in the road. These forks can represent opportunities to grow your business or keep it in its current form. Should you steal second base?
The more you know about the situation, and the impact it will have on the rest of the year, the easier it may be for you to make the right decision. You may not want to hire a new employee or open a new location if you expect cash flow to be a problem in the following few months.
Review Your Plan.
The best time to review the forks in the road for 2016 may be before you come to them. Create “what if” scenarios and answer the questions based on each situation. The scenarios should be both positive and negative.
For example, what would you do if you lost your biggest client to a competitor? What if your competitor wanted to sell their business to you; would you buy it? Think about the different potential scenarios you might see in 2016. The better your preparation for each scenario, the easier it may be to make a decision.
Have a Backup Plan.
This step can be critical to your success. No business owner can make the correct decision every single time. At some point, you will likely make a mistake; you will probably choose the wrong path. When it happens, you should consider having a plan B in your back pocket. If you hired a new employee and cash flow becomes strained, what are your options? If your best salesperson goes to work for someone else, what is your plan to replace them? Who will take over for them on an interim basis?
The winners in business for 2016 will likely be the companies that put together a solid GPS plan (also known as a business plan) to help them achieve their goals. The business leaders will review the results with their teams on a regular basis throughout the year and make changes when necessary. They will also have contingency plans in the event their original plans are no longer relevant. The winners in business will know the best time to steal second base.