Risks of Owning a Business Venture
You may encounter problems and risks when starting and operating a small business venture. However, by knowing the possibilities, you will be better able to avoid them (this is article #2 in a series on basic business information and insights).Getting into disputesAs a business owner, there is always the possibility of getting into disputes. The two main groups of people or organizations you deal with are customers and suppliers. You need to keep good relations with both of these groups.Following are the two main reasons for getting into disputes:Failure to come to a meeting of the minds — Both parties to a proposed transaction need to understand the complete agreement. This understanding should explicitly include any assumptions and expectations by either party. It is best to have the complete agreement written down so both sides can review it. Then they can resolve any apparent problems before any transaction takes place.Failure to keep your promises and agreements — Don’t make any promises or enter into any agreements you can’t keep. Write a summary of any promises or agreements you make. Keep these summaries in a special journal. The summary should identify the other party, include any deadline, and describe the desired results. You then can add these commitments to your to-do list. Later on, you may want to prepare a work plan showing how to achieve the desired results. These measures will help you keep your promises and agreements.Losing moneyYou lose money when your costs and expenses exceed your sales. To avoid losses, you need to increase sales, reduce costs and expenses, or both.Following are steps that increase your chances for making a profit:* Find an opportunity in the marketplace that excites you and matches your capabilities* Verify that there is an adequate demand for your proposed product* Determine the needs and wants of your prospective customers, then insure that your product satisfies these needs and wants* Design an advertising program that emphasizes the needs and wants of your prospective customers* Control costs and expenses when planning, starting, and running your business venture* Test and perfect your advertising campaign as you begin business operations* Make any needed changes in your product or business operations to keep your customers satisfiedNot complying with governmental rulesGovernments impose various fees and licenses, registration requirements, rules and regulations, and taxes on business firms. In addition, there may be special requirements before a firm hires any workers, engages in dangerous operations, damages the environment, or becomes a nuisance in some way.To avoid any problems with the government, you need to determine their requirements and decide how to obey them. Do this before starting business operations.(However, if your business venture is small enough, it may not be subject to all of the above requirements. A local attorney, accountant, or bookkeeper may be able to advise you in this matter.)Spending less time with family and friendsThere are only so many hours in a day. So you don’t want business operations to take too much of your time. One way to reduce the time spent on business operations is to study and apply the ideas on the “Use Time Saving Tips” page on my website.Trying to handle too muchIf you lack business training and experience, you may have too much to handle when starting a new business venture. The better way is to get any needed training and information before you start business operations.The rule is — start out small, then gradually expand business operations as your experiences and skills develop.
