I had the opportunity to attend a risk assessment training through SCL. The employees at SCL can get a bit divorced from the financial and legal risks of large projects in their silos – no skin in the game – so SCL is also paying people to assess these kinds of risks. Here’s standard project management risk management, as noted from the training:
- This is brainstorming. Assess all the risks. Invite representatives from every category of stakeholder to the table, or even better? All the stakeholders! Different groups of people will have different concerns about the project, which can be very valuable to note!
- Write all risks like this: PROBABILITY & IMPACT of some EVENT, or PIE. Likelihood of the risk, cost of the risk (not just dollars but also time, resources, etc.), and what the risk is specific to its One risk may have multiple causes and these are actually separate risks (eg delays due to a labor strike vs delays due to late resources).
- It may help to graph risks on a probability/impact chart (simply low to high). Analyzing the risks in this way will help you to make decisions in the next step.
- Determine the action, or response, you will have to the risks. Maybe you’ll be preventative, and if you can do that, that’s great! Maybe you’ll have a plan of action ready in the event that the risk is realized, and that’s great too! Maybe you decide not to do anything about the risk because it’s so small or so unlikely. The key is in thinking your response through ahead of time so you don’t lose momentum.
- Go over the risk assessment on a regular basis. Make changes as necessary; risks may change (especially in our multi-year projects) and the documentation should reflect that.
That’s the long version, for multi-million dollar projects in the public sector. How does that apply to someone attempting to start a small business and grow that to a sizable and even a bit reliable? Take the example of someone who currently has the safety net of a job, or perhaps their parents are paying to put them through school and this person is motivated to build something on the side.
- All the money you put into the business. You could lose it all. That’s paid up front and should never be put on credit. Only play with money you are willing to lose! There is a 90% chance that the first money you play with, you will lose! Don’t let that stop you.
- Becoming successful will also make you very busy! I would say that there is a 99% chance you will be busier than you want to be at some point in time should you choose to take on an entrepreneurial endeavor while also going to work or school full time. One thing you can do to mitigate this is to be prepared to pay someone (friends, family) for help OR prepare to hire a virtual assistant as business starts moving
- Being sued. There may be a 5% chance at most of being sued for copyright infringement or something else unless you’re doing something very wrong. The best thing to do to combat this risk is to prevent it. Do not use Google images to find pictures for your ads; there are open source & free pictures available through Pexels and other similar websites. Do not sell Disney, Nike, or other products with brands; sell generic stuff and move towards white labeling when possible. Etc.
- You may quit your job. There is a risk that you will start making money on the side, so much so that you will want to quit your job. There is a risk… that you will make a decision? No need to place a percentage on a personal decision. This risk is entirely under your control. Don’t get sloppy at work. Become successful outside first, and use that to buy your freedom (and quit the rat race) as soon as it’s comfortable.
- What if you quit your job and then hard times come on your business? There is a 30% to 60% chance that “hard times” will come to an entrepreneur. Hell, a 99% chance that income will take a short dip at some point. We’ve all heard of algorithm changes in Amazon that made people quit FBA, incoming competition, and a million other things that will force an “adapt or die” reaction. That’s entrepreneurship. Some things to mitigate? Save up a year’s worth of living expenses outside of your company and not in a retirement account. The reason why should be obvious. Set up at least 2 or 3 streams of income after you have your first pumping strong. If on stream gets completely taken out? You’ll have 2 others to focus on and grow to cover the loss of the first one. Finally, you can ALWAYS go back to a temporary job waiting tables or some other entry level position you were doing before you took the jump.
There are likely other risks, these were the ones that came to mind for me. Go over risks like this with yourself. Fear of risks can keep you from performing optimally; your lizard brain takes over, you sleep in, get sick, and avoid making dreams come true. When it boils down to it? Making it as an entrepreneur is more freeing and safer for you than miserably, begrudgingly showing up at a corporate environment for 30+ years.