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Finance
It is general notion that a start-up always faces higher degree of risk. But, this in not completely true. A bigger organization will always face higher degree of risks because of large size, huge finance obligation, bigger team, global operation etc. Shifting from one strategy to another to reduce risk is time taking and by the time it takes alternative course of action, aftermath of risk becomes severe and unmanageable.
In contrast, smaller organizations including start-ups can shift to alternative strategic plans soon to mitigate or reduce risk.
Let us discuss that what kind of general risks an organization may face:
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Management risk- any of the key persons leaving the organization Product risk- failure of product because of being out-dated or competitors came up with much advanced product or associated services Team risk- execution team leaving the running projects suddenly Suppliers ' risk- vendors / suppliers cancelling the contracts at very short notice Legal risk- companies falling into litigations with competitors Environmental risk- sudden development of rules and regulations by state or central government putting pressure hard to survive Financial risk- inability to service to debt or not meeting financial expectations of outside equity providers
General approach for mitigating or reducing the impact of risks:
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Try to forecast the risk- although it is difficult in changing business environment but to some extent it is possible as well as desirable. Do not ignore ifs and buts- always have back up plan; be it related to product / services modification, new launch, execution team etc. Communicate well inside and outside the organization- miscommunication will create risk Maintain relationship- develop and maintain relationships with current customers / vendors and also with past vendors. Raise finance only to the extent of requirements and stage-wise Focus on cutting down the operational and other cost Develop new way of marketing
To conclude, risk is a double-edged sword. Taking risk is good but mitigating the impact of unwanted risk is desirable. Understand your business and business dynamics very well and deeply. Do counter attack if possible and required.
www. Venture-Care. com / Magazine December 2017
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