These days, retirement doesn’t necessarily mean an end to working. With college loans and mortgages paid off, many baby boomers are becoming entrepreneurs and pursuing their business dreams. The “Coming Entrepreneurship Boom” survey conducted by the Kauffman Foundation found that the highest rate of entrepreneurial activity is among the 55-64 age group, rather than those aged 20 to 34. Longer life expectancy and better health in later life have contributed to the rise in older people going into business.
Since these baby boomer entrepreneurs have more wealth, less debt and the life experience to draw on when staring a new venture, they can be more risk-taking than younger entrepreneurs. On the other hand, no matter how much experience you have, there are many risks that you cannot afford to ignore when starting a small business, including market risk, financial risk and management risk. To make your entrepreneurial journey easier, you must be proactive in identifying risks and taking steps to mitigate them before they happen:
Market research
To effectively manage market, financial and management risks, you must conduct market research in order to understand the current market conditions and trends. Find out as much as you can about your customers. Who are they? How can you best serve them? What types of products and services are in demand? Do your customers prefer to buy in store or through the internet?
It is important to assess the competitive landscape and to know your competitors. The easiest way to find out about your competitors is to conduct an online search using free services to search Companies House direct. Online services like these allow you to search for information on more than two million companies using either a company’s name or its unique company registration number. For a small fee, you can obtain copies of information about a company’s filing history and selected company reports.
It is also important to understand your industry. How large is it? Is the market booming or shrinking? Market research can provide useful information for your overall business strategy, including production planning, financial planning, marketing, advertising and staffing. The information will help you hire the right manager and staff to run the day-to-day operations. Moreover, with the right information, you can grow your business faster and adjust your strategy to adapt to changes in economic conditions.
Write a business plan
To reduce financial risk, you should put together a comprehensive, effective and well-written road map for your small business. A business plan that outlines your short and long-term goals, target market, financial plan, marketing and advertising strategies, human resource plan and production plan. You must generate a financial analysis to understand your revenues and costs, make financial projections to determine your breakeven point and identify factors that might influence your revenues and costs. With a business plan, you can manage the budget better, track all expenditure and measure your performance. A good business plan also acts as a marketing plan to help secure external funding for the business.
To run a successful small business, an entrepreneur must understand the inherent risks and take steps to minimise them.