Notes

How Do You Measure the Risks and Rewards That Are Associated with Your Business?
Entrepreneurs are risk takers by nature. Whether it is the forming of a new venture or the expansion of existing business, entrepreneurs face different types and degrees of risk before any rewards could be realized. In pursuit of their dreams, entrepreneurs come to realize the delicate balance that exists between risks and rewards.

It's a given proven fact that starting and running your personal business is inherently risky. In fact, according to the Small Business Administration, the chance of failure is extraordinarily high for entrepreneurs starting new ventures. Nearly 10% of all firms fail every year and nearly 61% of manufacturing firms close their doors within the first five years of operation.

The small business failures are sobering statistics. So, before you "bet the farm" on that home based business venture or the expansion of your existing business, calculate and understand the potential risks and rewards. First, it's critical that you understand and assess just how much risk it is possible to tolerate in your new venture or the expansion of one's existing business. Make sure you have a realistic view of your home based business and the upsides and downsides associated with pursuing it.

The rewards for launching a fresh business or expanding an existing business, however, could be great. Studies also show that entrepreneurs take into account a big proportion of the country's wealth and entrepreneurs have higher savings rates than that of traditional workers.

It is very important determine how much risk it is possible to withstand in a new venture or the expansion of a preexisting business. Before you even consider launching or expanding a preexisting business, you need to have strategies set up to offset potential losses or unforeseen challenges. As you assess your potential risk factors, be brutally honest and examine these questions:

* How many years can you go without making a profit?

* Is it possible to tolerate possible financial loss?

* Can you survive the increased loss of all of your invested capital?

* Have you taken steps to mitigate risk with insurance?

* Are website sharing personal risk with investors?

* Have you reserve savings to cover potential losses or dry spells?

* Do you have a contingency plan if you lose an integral client or employee?

* Is it possible to afford to risk your capital, services, and reputation?

A feasibility study is a superb tool that will help one to assess risk and reward. To Start An Online Business offers a detailed investigation and an analysis of factors that influence your project to determine set up project is viable. The analysis examines the economic, marketing, technical, managerial, and financial aspects of your proposed business idea. The feasibility study is based on a price benefit analysis of your actual business, and the analysis is used to aid your decision-making process. A feasibility study is an efficient way to safeguard contrary to the waste of resources of time, people, or money that may be exhausted before a concept or project is deemed viable.

Whether you are trying to get a SBA business loan, seeking funds for expansion or plant modernization, or deciding which steps come next in growing your business, an in depth feasibility study offers you the professional support that you should make your case. An intensive feasibility analysis investigates the impact that all of following issues can have on your idea or project:

* Economic (labor, utilities, transportation, economic impact, etc.)

* Marketing (availability, plans, competition, targets and potential, etc.)

* Technical (site, equipment, modernization, constraints, etc.)

* Financial (cash flow, costs)

* Managerial (assessments, recruiting, training, and development)

The result of the feasibility study is a thorough analysis of the feasibility of your proposed business idea or project. If your idea or project is deemed feasible from the results of the study, then your next step would be to proceed with a formal business plan.

An author, speaker, and consultant, Terry H. Hill is the founder and managing partner of Legacy Associates, Inc., a small business consulting and advisory services firm based in Sarasota, Florida. A veteran chief executive, Terry works directly with business owners of privately held companies on the issues and challenges that they face in each stage of these business life cycle. Terry may be the author of the business enterprise desk-reference book, How exactly to Jump Start YOUR ORGANIZATION. He hosts the business enterprise Insights from Legacy Blog at [http://blog.legacyai.com] and writes a bi-monthly eNewsletter, "Business Insights from Legacy eZine."

By registering for Business Insights from Legacy eZine at http://www.legacyai.com/Business_Insights_eZine.html it is possible to keep abreast of the most recent tips, tactics, and best business practices. You will, also, receive the free eBook, Jump Start Your Understanding of Business.

Contact Terry by email at http://www.legacyai.com or telephone him at 941-556-1299.
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