Do you take risks? I’d imagine everyone does daily. The definition of risk is to expose to danger, loss, or harm. Synonyms to risk include chance, venture, peril, danger, or hazard. So, a venture, such as creating a start-up, can be a risk. One of the biggest risks to your venture is financing your beginnings. Some seek internal support from family, friends, or miracle. Others seek external financing from banks (loans and/or credit cards), investors, donators, or any business means possible. I chose to take a small amount of cash and invest in my penny stock strategy of value type companies and candlestick charting techniques. I’m taking a risk of losing my whole starting cash investment in a high risk venture, as defined by the investment community.
Dave Lavinsky with Entrepreneur.com offers 5 ways to minimize risks from investors’ perspective who might finance your business:
+ Build a board of advisors. You want to find industry experts and professionals to help advise you during business growth and operation. I chose my family and friends who know about finance and investing.
+ Use beta customers. This means finding prospective customers who will do free product and service testing. Their input offers valuable market research to your business. I use forums to talk about investing ideas and read feedback.
+ Forge partnerships. Developing relationships with others via networking, attending events, education, and offering your expertise helps show your viability in your industry.
+ Secure publicity. Media outlets advertise businesses that will benefit their customers. Getting your vision, expertise, and product/service recognized helps secure future customers. Investors like customers. I utilize social media as a free means of publicity.
+ Generate revenue. Customers who buy your product/service show their support for your business. This results in cash flow and revenue to aid your business in tackling the future. This is a key milestone to investors and financiers to help your business raise money. Once I sell stock I proverbially generate revenue.
Read more and photo courtesy of Entrepreneur.com article 226602.
For those who want to learn more about risk appetite (types of risk), tolerance (how much risk), and management (how to reduce and live with risk), the Institute of Risk Management (IRM) offers many resources: IRM Publications.