Starting a business is the unknown raised to the thousandth power. The only way to deal with risk is to do your homework well. It’s not about spending half your youth trying to figure out what might happen in the future, it’s about identifying the most likely threats to your business. The best business plans are those that give ample space to a chapter called Contingency Plan. In short, before launching, a business must ask itself what could go wrong? What would be the worst thing that could happen to my company? What could be the worst thing that could happen to me as an entrepreneur?
James McGrathEconomist and best-selling author The little book of the big management questions (Alienta Editorial, 2015) asserts that “all plans are future-oriented and therefore have potential risks because you are dealing with uncertainties.” McGrath proposes five basic strategies for dealing with the risks inherent in any business project indwell:
1. Passing of Risk. “Transfer the risk from the team to external experts,” he says.
2. Risk Delineation. “Change the order in which you want the activities you plan to run in,” he suggests.
3. Risk Mitigation. “It reduces the likelihood of the risk materializing. For example, if you know your business is going to be bottlenecked and you need to increase the number of people working on a project (whom you don’t need to hire), you can outsource and thus transfer the risk,” he says.
4. Elimination of risks. “If it’s a risk you can avoid entirely, eliminate it. If you know a technology has a risk and you can replace it with another, replace it,” he says.
5. Risk Acceptance. “Sometimes you will have no choice but to realize that there is not much you can do other than accept the risk and have a contingency plan,” he concludes.
What can you do?
Every emergency plan starts with a risk assessment:
– What can happen this affects your project? here you have to Use your SWOT analysis.
– ¿what chances what happens?
– In case it happened,what effect would it have about the project?
– Can you put funds to it prevent it from happening?
– If you can’t stop it, you know it what action you should take to minimize its impact?
McGrath suggests that you focus your attention on “the risks that have the highest impact and are most likely to materialize.”