How to Mitigate the World's Biggest Business Risks

If someone were to ask you what the biggest risks in business were, what would you say? I think most of us would point to outside factors that are beyond our control: geopolitical forces, world economics, even our rapidly changing world of technology. That level of unpredictability is just too much risk to anticipate and challenge for a modern business!

However, when we examine ourselves a little more closely, I would wager there are significant business risks that we very much have control over. As someone heavily involved and experienced in the world of real estate investing, I know the value in mitigating risk. In fact, it's critical to success.

This isn't just true of investing, it's true of business and our everyday decision-making.

So how do we mitigate the world's biggest business risks—the ones that we actually have control over?


4 Steps to Minimizing Your Biggest Business Risks

1) Stop Jumping the Gun

One of the biggest risks in business is a lack of preparation. When we jump into decision-making ill-prepared and ill-informed, it often leads to disaster. At times, we can get caught up in analysis paralysis and fail to make any decision at all, but riskier is to jump into decisions without all of the essential facts and data on the table.

In the same way, to launch a project, product, or whole business prematurely is asking for trouble. Maybe you set a goal date. If you aren't ready, push it back. It's better to delay a marketing campaign, a ribbon cutting, or a product launch than to send out an unprepared team, a subpar product, or an unpolished campaign. Jumping the gun creates chaos.

2) Read the Fine Print

This is tricky, particularly for young or inexperienced business owners and entrepreneurs. It's invaluable to have a legal expert or interpreter to be able to decipher legal documents, agreements, and fine print. When it comes to company and business ownership, partnerships, shareholding, boards, and other nuanced legal and business agreements, you have to be so sure of what you're getting into.

So many naive business owners have been duped out of their business either in whole or in part, and it's entirely legal. Read the fine print, and more importantly, understand it.

3) Play Well with Others

I don't know about you, but I have some sore memories of group projects in school. It's not that I didn't like working with others. Sometimes my partners just didn't do their work! My grade depended on them. I could do everything right, but if they didn't, too bad!

I feel like the business world can be a lot like that sometimes. Thank goodness we get to pick who we work with. That's the key: not only do we have a responsibility to be ethical, upstanding business partners, but we have to be very mindful of who and how we work with others in business. It's risky to enter into contracts, partnerships, and other agreements (remember the fine print?).

You give up a certain degree of control. Having help and insight from others can be invaluable, but it can also bring risk with it. Be sure to cover your bases in any given contract, look for warning signs, and be diligent throughout the whole process.

4) Forget Assumptions

Assumptions are a business killer. I've seen my fair share of businesses fall prey to the consequences of bad assumptions. This happens in more ways than one and it has devastating effects on the health of a business. Let's cover just a few.

  • Assumptions About the Consumer: People spend a lot of money on market research for reason. However, I've seen more businesses fail because they assume that their business is providing something people want or need when they don't. They release a tone-deaf marketing campaign. They miss out on a valuable and ripe pool of consumers. They refuse to target the right demographics or expand into the right markets. When we make assumptions about the consumer rather than looking at data about the consumer, we miss opportunities at best and risk a PR disaster at worst.

  • Assumptions About Security and Compliance: Coasting is dangerous. For many business, questions of security, changing laws, health and safety, and compliance can be thought about only when it becomes a problem...or a lawsuit. It is critical for businesses to keep these seemingly secondary issues at top-of-mind. Lock down cyber-security. Stay abreast of compliance issues. Don't assume that everything is fine just because it hasn't become an issue yet. Check and double check!

  • Assumptions About the Competition: Lastly, we can make assumptions about the competition. Oftentimes, we look to the competition for insights and an edge. Have you ever lived in a city where there was clear demand for say, a certain type of restaurant, but there was an over-saturation of another type of restaurant, and they kept failing? One could assume that many Italian restaurants in an area meant that there was high demand. But failing to examine their performance means that opening another Italian restaurant is risky.

Are you using the competition truly to your advantage, or are you simply making assumptions based on surface-level evaluations? Be careful of this.

For any business, the key to success truly comes down to due diligence. So many risks and losses are avoided when we slow down and take the time to do our homework, do things right, and take it one step at a time.

What business risks do you find the most difficult to manage? Share your experience in the comments.