Launching Your Startup: Tips for Minimising Risk

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Starting a new business always comes with some level of risk. It’s impossible to eliminate all potential contingencies, and there’s no such thing as a completely foolproof plan. However, there are several ways that you can minimise risk and increase your odds of success. Here are three suggestions:

 

Write a business plan

It may seem old-school, but devising a formal business plan is still an incredibly important step in starting a business, and will guard against some of the financial and marketing risks you may come across in the future. Although most end up being quite lengthy and in-depth, getting started on your business plan is often far easier than it seems. Templates are available from government resources online and can help guide you through the process.

A solid business plan usually includes sections on your business objectives, sales strategy, marketing strategy and financial strategy. It should also include your targets and forecasts for sales, marketing and finances and you may want to list resources where you can research rival businesses, such as the Companies House website. This document will be your guidebook throughout the early stages of your business and is often essential when applying for grants, loans and investment funding.

Secure funding

Of course, financial risk is one of the biggest potential vulnerabilities of any new business.The best way to combat it is to secure an adequate level of funding prior to launching your startup. Rather than drawing from your own savings, keep outside investment and funding in mind; there are many people, companies and organisations looking to invest in startups. There’s money out there, it’s just a matter of convincing people that you’re the right candidate for it.

Look into grants provided by government organisations. Network with potential ‘angel’ investors – individuals willing to fund your business personally. Compare business loans to ensure you’re getting the best deals. Aim to have a diversified funding pool so that your financial risk can be spread across a number of different sources.

 

Get a mentor

Actually launching a new business is fairly straightforward in the online age. However, the next stages – the selling, marketing, negotiating and budgeting – are far more difficult to manage. This is where a mentor can be of great help.

Whilst the concept of having a ‘mentor’ may seem like something reserved for talented children or troubled youths, it’s also applicable to entrepreneurs. For many entrepreneurs, it’s in their nature to be independent and even defiant at times. This quality is what drives them to succeed, but it’s also important not to be afraid to ask for advice from time to time. Industry experience is one of the best safeguards against risk. Seeking out a business mentor – someone who has years of experience in a similar field – can prove very useful as you navigate the unknown waters of a new business endeavour.

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Think Differently About Your Debts

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For many people, having debts can feel like a weight around your neck, dragging you down constantly due to the pressure that it puts on you.

Research has even suggested that money worries can affect your decision making, due to the constant worry over an unfavourable financial situation, supposedly lowering your IQ by around 10 points.

As with anything in life there is always more than one way to approach something.

Prioritise debts emotionally?

Think of it as a battle you can win, rather than an endless struggle that will take a long time to pay off.

Many people may prioritise paying off the largest amount first. It can give you more satisfaction to pay off something that may mean more to you emotionally, rather than just paying off the largest sum.

If you are free of debts that are having a serious effect on your living expenses, you can list your debts in according to the ones that would mean the most to you to clear. The sense of satisfaction gained from clearing the debts that mean more to you emotionally can really spur you on to repay any other less significant debts.

For example, you may owe money to a family member which could be harming your relationship with them. By approaching this debt first you can begin to solve this issue, giving you a clearer head to tackle any other existing debts. You may want to give an emotional value to the rest of what you owe and continue the cycle.

However, if there is an amount you owe that is seriously affecting your ability to meet other more essential living costs, such as shopping and utility bills – you should prioritise getting rid of this debt first.

There are solutions available to you like consolidation loans which can help you to completely clear some debts, leaving you with more manageable repayment amounts.

If you cannot find a solution to your situation, you may want to contact debt advice charities. StepChange, Citizens Advice Bureau, Debt Advice Foundation and National Debtline are all able to provide you with free, independent and tailored advice to fit your situation.

Leave debts in the past

You were a different person when you took on these debts. Even now, by acknowledging that you have had a problem you are becoming more responsible and distancing yourself from the person you were before.

Rather than constantly beating yourself up about getting into debt, you should forgive yourself for that behaviour.
Further on, you will be able to feel much greater satisfaction the more you begin to repay what you owe.

Remind yourself of your progress

It can be a brilliant idea to keep a diary of how you overcame your debts; this can help to serve as a positive reminder of how much you’ve cleared and something that you can look back on with pride.

You may even be able to use it to offer some advice to any friends you have that are in the same position.

Enjoy the process

It’s likely that you’ll find it much easier to carry out a task if you enjoy doing it, rather than attempting a task you hate.

This may be difficult, especially if your debts are causing you some sleepless nights, but by concentrating on the positive changes you’re making, you should begin feeling a little better about your situation. Just remember that each step you take is one where you are nearer to being debt free.

This article has been written by Jamie Smith on behalf of Loans4Tenants.

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