Notes

How Do You Gauge the Risks and Rewards That Are Associated with YOUR ORGANIZATION?
Entrepreneurs are risk takers by nature. Whether it is the forming of a fresh venture or the expansion of existing business, entrepreneurs face different types and levels of risk before any rewards can be realized. In search of their dreams, entrepreneurs arrived at realize the delicate balance that exists between risks and rewards.

It's a given proven fact that starting and running your own business is inherently risky. Actually, according to the Small Business Administration, the risk 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 realize and assess how much risk it is possible to tolerate in your brand-new venture or the expansion of your existing business. Make sure you have a realistic view of your business opportunity and the upsides and downsides connected with pursuing it.

The rewards for launching a new business or expanding a preexisting business, however, can be great. Studies also show that entrepreneurs account for a large proportion of the country's wealth and entrepreneurs have higher savings rates than that of traditional workers.

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

* How many years is it possible to go without making a profit?

* Can you tolerate possible financial loss?

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

* Have you taken steps to mitigate risk with insurance?

* Are you sharing personal risk with investors?

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

* Do you have a contingency plan in the event that you lose an integral client or employee?

* Can you afford to risk your capital, services, and reputation?

A feasibility study is a superb tool which can help you to assess risk and reward. It offers an in depth investigation and an analysis of factors that influence assembling your project to determine whether or not the 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 cost benefit analysis of one's 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 which may be exhausted before an idea or project is deemed viable.

Whether you are applying for 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 will provide you with the professional support that you should make your case. An intensive feasibility analysis investigates the impact that every of following issues might have on your own idea or project:

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

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

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

* read more (cash flow, costs)

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

The consequence of the feasibility study is really a thorough analysis of the feasibility of one's proposed business idea or project. If your idea or project is deemed feasible from the results of the study, then the 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 business consulting and advisory services firm located in Sarasota, Florida. A veteran leader, Terry works directly with companies of privately held companies on the problems and challenges that they face in each stage of these business life cycle. Terry is the author of the business desk-reference book, How to Jump Start YOUR ORGANIZATION. He hosts the Business Insights from Legacy Blog at [http://blog.legacyai.com] and writes a bi-monthly eNewsletter, "Business Insights from Legacy eZine."

By signing up for Business Insights from Legacy eZine at http://www.legacyai.com/Business_Insights_eZine.html it is possible to keep abreast of the latest tips, tactics, and best business practices. You'll, 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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