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In this such a information related to how do you measure the risks and rewards that are associated with your business.
How do you measure the risks and rewards
that are associated with your business?
By Terry H. Hill
Copyright© 2009 Terry H. Hill
Terry H. Hill is the founder and managing partner of Legacy Associates, Inc, a small business consulting and management support services firm.
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 their business life cycle. To find out how he can help you take your business to the next level, visit his consulting site athttp://www.legacyai.com or the training site athttp://www.businessstrategypipeline.com
1 Entrepreneurs are risk takers by nature. Whether it is the formation of a new venture or the expansion
of existing business, entrepreneurs face different types and degrees of risk before any rewards can be
realized. In pursuit of their dreams, entrepreneurs come to realize the delicate balance that exists
between risks and rewards.
It’s a given fact that starting and running your own business is inherently risky. In fact, according to
the Small Business Administration, the risk of failure is extraordinarily high for entrepreneurs starting
new ventures. Nearly 10% of all firms fail each 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 new 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 how much risk you can tolerate in your 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 associated with pursuing it.
The rewards for launching a new business or expanding an existing business, however, can be great.
Studies 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 important to determine how much risk you can withstand in a new venture or the expansion of
an existing business. Before you even consider launching or expanding an existing business, you need
to have strategies in place to offset potential losses or unforeseen challenges. As you assess your
potential risk factors, be brutally honest and consider these questions:
• How many years can you 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 if you lose a key client or employee?
• Can you afford to risk your capital, services, and reputation?
A feasibility study is a great tool that can help you to assess risk and reward. It provides a detailed
investigation and an analysis of factors that influence your project to determine whether or not the
project is viable. The study 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 your
How do you measure the risks and rewards
that are associated with your business?
By Terry H. Hill
Copyright© 2009 Terry H. Hill
Terry H. Hill is the founder and managing partner of Legacy Associates, Inc, a small business consulting and management support services firm.
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 their business life cycle. To find out how he can help you take your business to the next level, visit his consulting site athttp://www.legacyai.com or the training site athttp://www.businessstrategypipeline.com
2
actual business, and the study is used to support your decision-making process. A feasibility study is an
effective way to safeguard against the waste of resources of time, people, or money that 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, a detailed feasibility
study will give you the professional support that you need to make your case. A thorough feasibility
analysis investigates the impact that each 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 the next step
is to proceed with a formal business plan.
doc_817819004.pdf
In this such a information related to how do you measure the risks and rewards that are associated with your business.
How do you measure the risks and rewards
that are associated with your business?
By Terry H. Hill
Copyright© 2009 Terry H. Hill
Terry H. Hill is the founder and managing partner of Legacy Associates, Inc, a small business consulting and management support services firm.
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 their business life cycle. To find out how he can help you take your business to the next level, visit his consulting site athttp://www.legacyai.com or the training site athttp://www.businessstrategypipeline.com
1 Entrepreneurs are risk takers by nature. Whether it is the formation of a new venture or the expansion
of existing business, entrepreneurs face different types and degrees of risk before any rewards can be
realized. In pursuit of their dreams, entrepreneurs come to realize the delicate balance that exists
between risks and rewards.
It’s a given fact that starting and running your own business is inherently risky. In fact, according to
the Small Business Administration, the risk of failure is extraordinarily high for entrepreneurs starting
new ventures. Nearly 10% of all firms fail each 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 new 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 how much risk you can tolerate in your 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 associated with pursuing it.
The rewards for launching a new business or expanding an existing business, however, can be great.
Studies 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 important to determine how much risk you can withstand in a new venture or the expansion of
an existing business. Before you even consider launching or expanding an existing business, you need
to have strategies in place to offset potential losses or unforeseen challenges. As you assess your
potential risk factors, be brutally honest and consider these questions:
• How many years can you 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 if you lose a key client or employee?
• Can you afford to risk your capital, services, and reputation?
A feasibility study is a great tool that can help you to assess risk and reward. It provides a detailed
investigation and an analysis of factors that influence your project to determine whether or not the
project is viable. The study 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 your
How do you measure the risks and rewards
that are associated with your business?
By Terry H. Hill
Copyright© 2009 Terry H. Hill
Terry H. Hill is the founder and managing partner of Legacy Associates, Inc, a small business consulting and management support services firm.
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 their business life cycle. To find out how he can help you take your business to the next level, visit his consulting site athttp://www.legacyai.com or the training site athttp://www.businessstrategypipeline.com
2
actual business, and the study is used to support your decision-making process. A feasibility study is an
effective way to safeguard against the waste of resources of time, people, or money that 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, a detailed feasibility
study will give you the professional support that you need to make your case. A thorough feasibility
analysis investigates the impact that each 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 the next step
is to proceed with a formal business plan.
doc_817819004.pdf