Following the Children of Israel into the Wilderness VII
Risk management for start-up is an important issue to consider for the entrepreneurs.
First thing first, let’s refer to the Biblical context again.
“By day the LORD went ahead of them in a pillar of cloud to guide them on their way and by night in a pillar of fire to give them light, so that they could travel by day or night.” Exodus 13:21, The Holy Bible
So far, we have been following the Children of Israel into the wilderness. As they went on their way, there were pillar of cloud and pillar of fire to lead them. Pillar of cloud was for the day, pillar of fire was for the night.
What would you expect when if you were wandering on foot in an uninhibited land?
It spells DANGER… especially at night when the vision is not clear.
Like you, the Children of Israel was probably expecting ‘potential danger’ when they wandered in the wilderness (an uninhibited land).
But the good news is that they were protected. They were not alone because the LORD led them by a pillar of fire, so they can travel by night in safety.
Other than guidance, fire drives away potential external danger at night: wild animals would stay away from them.
Fire also provides warmth; sudden drop in temperature at night could be life-threatening. Fire provides light for a clear vision.
External danger for the entrepreneurs
‘Pillar of Fire’ signifies a protection from life-threatening risk for the start-up. No entrepreneurs should expect a risk-free journey towards success, but risk should be properly managed or anticipated at every turn.
Risk = potential danger at night
What are the potential dangers (risk) for entrepreneurs?
The nature of risk is largely not within our control, but we can manage the magnitude of its impact on our start-up today and make way for its future.
First, environmental darkness poses great risk that is totally out of anyone’s control.
Natural disasters, war, political instability, poverty are some good examples of this kind of risk. In the natural, these situations could be damaging for some, but at the same time they generate opportunity for entrepreneurs that seek to meet the needs of the people in crisis.
If you live in an environment that are prone to these kind of risk, consider shifting your approach to a social enterprise. It is one of the most meaningful form of businesses, instead of starting a charity, you are providing business solutions to address unmet needs.
If you are one that can identify emerging social needs and gaps, you should explore starting a social enterprise. A social enterprise has a great potential in making a difference, create value and help solve social challenges in sustainable ways.
The second type of risk is largely a financial one. It is for those who live a stable economy, where financial services and all of kinds business flourish. Be prepared as there is no guarantee that economy continues to grow.
In affluent societies, the biggest financial risk for entrepreneurs would be bankruptcy.
Since there is no guarantee that all business start-up will succeed, the risk of losing your investments is present. As an entrepreneur, mental preparation of financial failure should always be in your plan B. Before you invest in anything, understand everything have its risk, always keep an alternative plan (or diversify your approach), you can minimise the damage if you meet with a financial crisis in your country or in the country you invested in.
Be prepared for the worst, if you are prepared, you have a chance to be those odd ones remain standing when economy took a down turn. Even if you lose everything, you can still stand up again and do something different.
Territorial Risk/Cross-border Risk
Third, when your business expands internationally, beware of the law in the country you are going into. Work with reliable local entities to ensure compliance in your respective industry. In this sense, you can minimise the cross-border risk.
The success or failure of a business in their international expansion is determined by how well one understands their host countries. The risk could lead to debt or even law suits, in some cases, it risks also your professional licence.
Be diligent in knowing your host country inside out before your venture out!
Lastly, the most unpredictable risk is rooted in human weakness that include fraud, mismanagement of fund, bribery, short of labour, mismanagement of all kinds and many more.
Human error leads to collapse of empire, business is no exception. However, the ability to amend from one’s mistake is wisdom. Learn from the industry guru is important, it is not necessary to revamp the wheel if successful examples exist. Experience from a mentor can save you from detours to your success.
Furthermore, human factor is not totally undetectable. It can be studied, understood and managed. If you envision to build a company of certain size, you should be endeavour in becoming a people person. Managing people requires great wisdom.
People are your assets; they are your customers, they are your staff and overall “human” is the key element of a successful business. Learn to build people, not to use people. It is a healthy practice to your business.
When crisis hits, it is the people you built who will stick with you.
“Two are better than one, because they have a good return for their labour: If either of them falls down, one can help the other up. But pity anyone who falls and has no one to help them up… Though one may be overpowered, two can defend themselves. A cord of three strands is not quickly broken. “ Eccl. 4:9-12, The Holy Bible
Are you a risk taker? Entrepreneurs are risk takers.
There is no perfect timing to launch out into the deep, but you should consider the likely risk in the respective environment before making a move.
Overall a word of caution: never start any business in Isolation, be connected, be knowledgeable, always be teachable and learn as much as you can.
Risk are to be identified, assessed and managed but it should never be something that freeze you from action.
P.S. ‘Pillar of fire’ provides light so you can see in the environment that is dark. Anticipate risk is possible when there is light, it serves as protection as well.
Next article will be on “Internal risk management”, stay tuned!