Fear

Robert Kyosocki once said, "If you do the thing that you fear the most, you will have conquered your fear." As an entrepreneur, fear is a constant companion. You are fearful that you won't sell any of your product, or run out of money, or be sued by a deadbeat, or....

You will never be able to avoid risk, however, if you can manage risk intelligently, you can minimize the risk and make it acceptable.

What are some of the ways that an entrepreneur can manage risks?

1) Incorporate: If you own a sole proprietorship, all that you now own, or will own in the future, can be taken away in a lawsuit. Unfortunately, there are a lot of people that are professional victims that are just looking to sue someone, and because we do not have a "loser pays" legal system, they do so at no risk. How do you manage those risks? Incorporate. If someone sues, and wins, all that they can do is to take the corporate assets, not your personal assets.

2) Insurance: Do you have a "key man" or woman that your business depends on to be profitable? What would happen if they died? What would happen if they got an offer at a different job? (Can you say, "Lebron James"?) Key man insurance is expensive, but it gives you a buffer to survive and move on if a key employee is no longer there. At the same time, if you have a key employee, and you are not paying them well, do not be amazed if they leave at the first opportunity. One of the ways to manage this is to give them a piece of the company. You do not do this out of altruism, but because it makes good business sense.

3) Investment (Research and Development): A lot of companies work like crazy to develop new technologies and have the latest and greatest product...and then stop innovating. In our technologically advanced culture, a new technology will be cutting edge for weeks. It will be innovative for months, and it will have a life span of 18 months...if you are lucky. If you are developing new technologies, you must be constantly adapting, revising, and coming up with new products/services that are "cool". If you don't you risk being a "buggy whip" manufacturer with a great product...but no demand.

4) Instant results marketing: One of the ways to lower your risks in marketing is to only pay for results. For instance, If your advertising budget is 10% of gross sales, and you want to increase sales, offer a 10% discount off purchases, if they buy using a coupon. You only pay for results WHEN the sale is made. OR, you use consultants, and you ONLY pay when they make a sale. By using production results (or commissions) you are only paying when you receive money. If you are using dinosaur marketing techniques, you pay for the possibility that someone will notice the ad, remember, contact you, and purchase. If you use Instant results marketing, you pay the commission AS you are paid, and not before. This lowers risk.

5) Bundling services/products: Instead of offering to sell your services piecemeal, offer to bundle services so that your customers pay for a larger purchase, increasing your revenue, by giving them a discount over buying the separate pieces individually. (Buy a case of Mountain Dew, for $150, rather than purchasing one Mountain Dew for $1.50. The per unit cost is lower individually, but by selling a greater volume, you increase your revenue. Assuming that they will continue to purchase your product.)

In short, if you are able to reduce your risk of failure, you will increase your chances of success, with all other variables being constant. Manage your fear, and you will manage your success.