First, let’s be clear. There is no way to start a business without any risk. Like any investment, risk is always present and although it would be nice if it weren’t, that will never be the case. An entrepreneur can, however, start a business with a lower level of risk than others who might have a higher tolerance for taking a risky step in their life. Here’s how.
How do you know if people like your product? The answer is to do market research but that can be expensive. Want to save money? Go to a mall, a coffee shop, a deli, or other place where people are relaxed and ask them their opinion of your idea. Use a free survey site and ask your Facebook friends to complete the survey. Don’t put money in to an idea that won’t work. Doing research at the very beginning of the process will minimize the time and money you invest in to your idea.
Save the Money
It will take much longer to actually open the doors, virtual or physical, to your business but if you save all the money you will need to open the business and have enough money to live on for at least one year, much of the short term risk is removed. Debt is the enemy to a new business because you have to have money coming in right away to make your debt payments. Opening with no debt lowers the amount of money you have to make right now.
Even if you don’t have debt, you will still have to pay the monthly bills but the less overhead you have, the less you have to pay out. If you start your business from your home, you won’t have rent payments. Don’t put money in to expensive advertising until you have cash flow, and don’t purchase a lot of new office equipment until your business grows.
Be Ready to Change
Regardless of how well developed your business plan is, be ready to evolve and refine. Your advantage is that you’re small and you can change your model rapidly if something isn’t working. Don’t be afraid to do that.
Remember that risk is always present but the best way to eliminate risk is to reduce costs, increase cash, and be ready to respond and make changes when the market tells you that something isn’t working.