Small business startup costs

What are the different types of small business risk?

Being an entrepreneur can be exciting and infinitely rewarding – but it’s also quite risky. Let’s review the types of risk you’ll most likely face as an entrepreneur, and how you can handle them.

IP Theft

Unfortunately, intellectual property theft and piracy can’t be stopped. However, you can lessen your risk by investigating suppliers and manufacturers before you commit to doing business with them, and registering all trademarks in all countries where your company is doing business.

Cyber Security Risk

We all know that cyber security risks are a way of life now. There are hackers who attack computer networks, phishing attacks (gaining access to sensitive data such as user names and credit card information), and viruses. Insurance exists to help you manage your internet risk. Make sure your insurance policy covers you if you conduct any part of your business online.

Supply Chain Risk

Your supply chain comprises the companies that provide you with raw materials, manufacturing and assembly activities, or inventory. When a supplier faces financial hardship and can’t provide supplies and the business owner has no back-up supplier, you can lose sales and customers. Mitigate supply chain risk by finding a contingency or back-up supplier.

Regulatory Changes

The risk of increased regulation, taxes, new laws and rules is very real. Unfortunately, it’s nearly impossible to predict them. Regulations and paperwork are frustrating for growing ventures and the cost of compliance — the time and resources required for a small business owner to comply with government rules and regs — is increasing every year.

Product or Service Liability

A growing small business, particularly one that manufactures a product, should plan for a potential product liability lawsuit (litigation) at some point in the company history. Mitigating the risk of product liability from the very beginning by running an efficient operation with clear safety and product quality standards will help prevent a legal minefield.

Decline in Sales

A decline in sales is usually met by an entrepreneur’s denial. In very small companies, the entrepreneur often is the sole employee responsible for all day to day operations of the business. Often, they lose sight of customer’s wants and needs and changing market conditions around them. Lowering prices is usually not the best response to a slowdown in sales. If customers understand the value of a product or service, lowering the price often confuses existing customers. When a growing business first notices a drop in sales, it’s time to find the root cause and make strategic changes.

Loss of Key People

No business can count on keeping key members of the team forever. People change, circumstances change. Succession planning — identifying people who can take over the company in an emergency, or take over the company permanently when the entrepreneur wants to exit — is an important part of managing business risk, particularly for the smaller business. Cross-training key people is one way to limit the risk of a business being left without someone to steer it.

Financial Risk

Financial risk is the ultimate risk for most entrepreneurs — lose the business and you’ve lost your investment. Managing regulatory, operational and market risks will limit the financial risk of running a business. Whichever risks you face with your business, remain practical and realistic. Avoid overanalyzing the situation or getting stressed out over the significance of your decisions and actions. Risks should be identified, analyzed and prioritized to make decisions easier on management.

Global Environment and Health Risk

Central banks and other authorities now consider climate change as a risk to financial stability. Additionally, we all remember the impact that COVID-19 had on small businesses all over the world. Create a climate action plan for your business and scan the business environment for potential threats to your business’ livelihood. Ensure your plan can be implemented quickly. Forewarned is forearmed!

Want help making decisions about risk? Check out our recent blog post about tips for managing risk in your small business!

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small business video marketing strategy

How to use video in your small business’ marketing strategy

Videos can be a valuable and effective tool in your small business’ marketing toolkit. While professional, high-quality videos are great, it can actually be quite accessible for many budgets. Often, the camera in your phone will do the trick. Here are five ways you can use videos in your small business marketing:

1) Video testimonials

Testimonials are a great way to show your potential customers why others love doing business with you. Next time you’re asking happy clients for testimonials, consider asking them to film a quick video testimonial. If your product or service has gotten good reviews on social media, consider reaching out and asking if you can use the video on your site, or repost it on your own socials.

Tip: While keeping brevity in mind, let your customer talk about their unique experience with your business. You never know what other customers will find useful!

2) Explainer videos

Explainer videos are short, 1-3 minute videos that guide people through the features of your product or service. It can be a great way to quickly introduce your customers to what you’re offering.

Tip: Write a script and read it aloud to someone – if they don’t get it right away, try again!

3) Behind-the-scenes videos

Taking your customers behind the scenes of your business can be a great way to highlight your unique difference, inform and educate, and form connections with your audience.

For example:

  • Preparing for a craft expo and what the event space looks like on the big day.
  • A speech you made or a discussion panel you hosted at an industry event.
  • How you source the materials for your organic skincare line.
  • A day of business travel, with your best tips.
  • Videos of your team members either introducing themselves and talking about what they do, or seeing them in action.

Tip: You don’t have to give away business secrets of course, but think of interesting ways you can take people behind the scenes. And keep it short! These are meant to generate interest, and the more shareable, the better!

4) Product demonstrations

A strong small business website is a great place to show off your product photos. However, seeing your products in action can entice customers even further. Consider creating videos that show off the exciting and useful features of your product so customers can get even closer to the full experience.

Tip: Be clear and lingo-free where possible.

5) Sharing your story

Your compelling story is a vital component of your business concept. It’s a great way to show why your business exists, and what drives you to put in the work every day. Why not share your story in a video? When your customers can actually see and hear how passionate you and your team are about your business’ story, vision, and mission, they get a valuable connection that goes beyond text on a screen.

Tip: Be genuine and unscripted. You can keep some talking points in mind, but your authenticity is what your customers will really connect with.

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what do investors look for in a business pitch

How do you build a strong team in your business?

Starting a new business can involve building a team of capable people who complement your strengths and skill set. Venture capitalists fund teams, not business plans, as they know these plans can change every day as market conditions change and new opportunities present themselves. They’re looking for a solid team to make these adjustments and be able to quickly pivot.

Here’s our advice for building a great small business team.

Don’t start with a layer of executives

If you hold the vision for your company, you most likely need functional roles more than you need a roster of VPs. At GoForth, we started with a single founder and a team of writers and creative people. We complemented each other in every way: a business prof and a creative team – but we had to make sure we would get along. The only team members you need are people you wish you’d see when you look in the mirror.

Bring experience to functional roles

You may be a founder or CEO for the first time in your new business and there’s a lot of on-the-job learning you’ll go through. Don’t surround yourself with people who are making it up as they go along. Experience matters.

Look for generalists rather than specialists

In the early stages, you’ll need people who can do lots of things, who can brainstorm outside of their function and see how their roles affect others. To ensure this framework is rooted in your young company, hire the core technical skills you need but surround them with “deep generalists,” or people who have a specific role but the proven ability to cross into others.

Look for failures

Yes, you read that correctly! People who have failed and recovered are better than people who have never failed. Failure is a great source of insight. But more than that, people who are not hobbled by failure and can figure out how to rise again have the right personality for a new small business.

Don’t hire people like you

You need diverse experiences, philosophies, and talents to cross-pollinate. That said, hire people you like! You’ll be spending a lot of time with them. Always focus on the next step. Everyone you hire is a magnet for future hires. Never hire a jerk, no matter how talented they are, and never hire an ego, no matter how accomplished they are. They can do more damage to your culture than their talent can possibly make up for.

Defer to other people’s greater experience

You don’t have the experience they do, or you wouldn’t have hired them. That said, always seek to understand how they’re applying their experience to your business. You’ll learn, and you’ll be able to guide how the pieces fit together.

There’s no substitute for passion

If you’re like many new small businesses, you can’t pay top dollar for talent, and you don’t want to be a stepping stone to a bigger salary at a corporation. So you need your team to share your passion for what you’re doing. They should see getting to change the world through your business as a valuable, if nonmonetary, part of their compensation. If they aren’t passionate, if they don’t feel they’re changing the world with you, they might not share your overall drive and vision for the business you’re growing.

Manage out under-performers quickly

If you’re starting from scratch, you need to see the business move forward every day. You can’t fund anything but A players. Every successful company has an equally successful team behind it. The first step is to build and foster a team that can drive your business – whether it be fashion, technology, hospitality, or however else you seek to change the world.

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53 small businesses you can start from home

Many entrepreneurs run home-based businesses. This sort of business has several upsides, including greater schedule flexibility, no dress code, potential savings on expenses such as childcare, and availability of tax deductions. And with the prevalence of online productivity and collaboration tools, running a business from home is easier than ever.

Sounds great, right? If you think starting a home-based business might be ideal for you, here are 53 small businesses you can start from home – either full-time, or on the side:

  1. Social media influencer
  2. Video creator
  3. Video editor
  4. Video game review writer
  5. Copywriter
  6. Travel writer
  7. Personal trainer
  8. Tutor
  9. Financial planner
  10. Bookkeeper
  11. Accountant
  12. Photographer
  13. Event planner
  14. Visual artist
  15. Blogger
  16. Computer repair
  17. Make-up artist
  18. Personal assistant
  19. Editor
  20. Graphic designer
  21. Web designer
  22. Web developer
  23. Wedding planner
  24. Bicycle repair
  25. Social media management
  26. IT consultant
  27. Marketing consultant
  28. Grant writer
  29. Alterations or sewing
  30. Hairstylist
  31. Personal shopper
  32. Virtual assistant
  33. Transcriptionist
  34. Massage therapist
  35. Bed & breakfast
  36. Daycare
  37. Clothing designer
  38. Dog walker
  39. Pet sitter
  40. Pet groomer
  41. Dog trainer
  42. Online reseller
  43. Jewelry designer
  44. Ceramicist
  45. Music instructor
  46. Purse designer
  47. Notary public
  48. Language instructor
  49. Home organizer
  50. Home cleaner
  51. Interior decorator
  52. Business coach
  53. Woodworking

As always, we strongly recommend proper research and planning when starting a small business. Entrepreneurs starting a home-based business should be especially wary of scams and opportunities that sound too good to be true. Also, investigate any licenses and permits your home-based business may need before getting started. And of course, investing in small business education is key to helping you beat the odds and find success in entrepreneurship.

Check out these posts for more information and advice about home-based businesses:

What are the warning signs of a home-based business scam?
You should sell these! How to start a business selling your handcrafted work
Perks and snags of internet or home-based businesses
Home-based business permits and expenses
Small business permits and licenses in Canada
Tools to help entrepreneurs stay productive

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