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Before anything else, one fact remains: the kind of business you get into and the degree of risk you are willing to take ultimately depends upon your character and the financial goals. It is essential therefore that from the start, you realize your risk taking capabilities, and determine how much you want to earn from your business, and how soon you plan to earn it.
After setting your business goals, the following tips on starting a business may prove useful. These are borrowed from Prof. Andy Ferreira, the Dean of the Asian Center for Entrepreneurship of the Asian Institute of Management.
Tip 1. Look at what you enjoy doing. There may be a business opportunity there.
Tip 2. Look at what irritates you. A product or service that alleviates it may make money.
Tip 3. Look at what people around you are looking for. There maybe enough volume to make money on.
Tip 4. Look for what gets out of stock often. There are unsatisfied demands that can be served.
Tip 5. Look at what people do not need and are Willing to give away. There may be someone willing to pay for it.
Tip 6. Look at what is making money now. Ask why There may be an opportunity to do better.
Tip 7. Look around in your neighborhood. The opportunities may be just outside your door.
Risk is essentially a factor of your own perception. Your character, knowledge of the business opportunity, and level of financial literacy influences your perception of risk and risk-taking. This is precisely the reason why some entrepreneurs are having fun exploiting a business opportunity while others find the same very risky, and vow not to even entertain the idea.
If you are not a risk-taker type or have been traumatized by a bad business experience (personal or someone else's) your perception of risk is likely to be higher than someone who is a risk-taker and didn't have that experience.
If the business opportunity is something you are less familiar with, the perceived risk is also bigger. The learning curve associated with running the enterprise is more evident. Naturally, you could commit mistakes and go through a good number of failures before you could master--and profit from--the business. The risk factor is further increased if you have a low level of financial literacy. If you are averse with numbers, any business you go into will in fact be very risky.
It might be very difficult to convince decidedly risk- averse persons to go into business. If you are not naturally risk-averse, increase your knowledge and familiarity with the business you are planning to go into and its industry; and increase your level of financial literacy. On the latter, you may read personal finance books, or join organizations that develop their members" financial intelligence, and register in seminars on business planning and financial management.
Another advice is not to put out your hard-earned savings until you are comfortably familiar with the business opportunity and are able to write a business plan or feasibility study. Familiarity with and mastery of the business opportunity will enable you to see the potential pitfalls. When you do a business plan, you will be able to anticipate possible problem and consciously provide for contingencies. Doing business without a business plan is like tiptoeing on a bamboo footbridge with blinders on (that is, slippery and dangerous).
(Source: Mind Your Own Business by Bronx Hebrona)