On the mind of every entrepreneur is profit, even when the road to making such profit is lined with enormous risks. Risk is the probable outcome of an event and all its potential consequences. Business, like life itself, is a risk.
Dumbra runs a small sized logistics business. He was doing quite well moving goods for a relatively small portion of the market. He started his business about 24 months ago after working for a multinational logistics company for several years. Dumbra’s business owns a few tankers & trucks used for hauling petroleum products from refineries or depots to factories, service gas stations etc. Sometimes his trucks move goods that are more expensive than the haulage trucks themselves. That’s the level of risk they carry sometimes.
On this particular day, Dumbra was moving petroleum products from a refinery in Northern Nigeria to Lagos. Unfortunately he didn’t insure the merchandise or the truck bearing the goods in transit. This episode marked the beginning of a series of thunderbolts that hit Dumbra’s business from every side. Because of the risk elements involved in his business, he ought to have known how to transfer some to his business risks to his insurers.
Most entrepreneurs either don’t know, are too stubborn to know or are willfully ignorant about the risk elements in their businesses. Every aspect of business has some measure of risks involved including the entrepreneur himself/herself. Some make reckless decisions on behalf of the enterprise. Other risk elements include financial, operational, strategic, safety, human and compliance aspects of the business.
To manage your business risks, always use the simple step of identifying the risk elements in all aspect of your business. Wisdom suggests that after identifying a risk, then take time to really analyse the risk. Check out the likely and potential effect on your business. Risk is not really a bad thing but it will be unwise to take risks recklessly without some measure of understanding and protection for your business. Measure the magnitude of the risk effects and impact on the business and plan how it can be mitigated, eliminated or treated.
Learn to transfer your risks by using the appropriate insurance cover for all or relatively higher measure of risks. Manage your personal emotions and sentiments. Manage your appetite for risks and be sensitive to your team. In all reasonable business ventures, liquidity is king; manage your cash flow well & with lots of discipline.
Finally, business is an opportunity to add value to people profitably, don’t expose yourself and your enterprise irrationally. No one wants to work for or do business with a person considered too risky & irrational in his/her dealings.