As you plan to transition from employee to entrepreneur, uncertainties are bound to happen. The uncertainties, which are not part of your initial plan, can negatively impact your business. These are risks. I have found the best way to deal with these is to use a 3 step approach.
There are a variety of ways to get started. Some folks apply the 3 step approach to the business as a whole. Since we are sometimes overwhelmed with all the roles that we now have to take on, I prefer to bucket and separate out work by roles as much as possible. The three buckets are timeline, product and budget.
Let’s look at timeline risks first.
I look at 1) any assumptions I may have made about timing 2) any lessons learned from others who have done what I’m trying to do.
So let’s put on your CEO hat.
- Have you seen pitfalls for businesses similar to the one you are starting?
- What assumptions or guesses have you made? Especially in regards to how long a task, milestone, or goal will take to get done.
- Are there tasks that you have no control over because someone else is doing them?
- Are there any dates that seem to be hard to keep?
- How much can you realistically work on your business after work and on weekends?
Once you have listed all the risks you can think of that may impact your timeline for making your first sale, take the time to determine possible impact and probability for each risk. The impact and probability will be used for step 3. I explained how that’s done here.
Now it’s time to determine appropriate responses for your risks. Although you will come up with a response for each risk, you probably won’t come up with a plan of action for each one. As discussed here, there are 4 ways to respond: mitigate, accept, avoid, or transfer.
And in the early stages of transitioning, you may not come up with a plan of action right away for how to mitigate or how to avoid. You are still probably learning if your business idea is viable or not.
Something else to consider when thinking of risks to your business: there are things that you wont think of explicitly so you can’t identify them. Since you don’t know what you don’t know, it’s best to always have some buffer.
I have created a risk register worksheet that is simple and easy to use. It’s good to keep all your risk information in one place. Please let me know if you have specific questions on this 3 step approach.