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SUCCESS FILES

the TIPS and tricks


to take calculated
risks in business.

How to…
Look before you leap
they say nothing ventured, nothing gained, but how
can you be sure if a business risk is worth taking?

M
icrosoft founder Bill Gates an objective opinion about your
faced his biggest decision business venture. “The riskier
in the embryonic stages a project is, the more important it
of his business: should he sell the is to ask an independent expert to
rights to his new software product examine what you plan to do. That in
to IBM for an up-front fee or should itself is a risk-mitigation strategy.”
he license it for less money and take
a punt on its long-term profitability? QUANTIFY THE RISKS
Gates chose the riskier second The next step is to test your
option and famously made a fortune. business strategy against your
Few businesses prosper without vision and quantify the risks. To
taking chances, but how can you better understand the dangers
tell which risks are worth taking involved, Chapman urges you
and which should be avoided? to undertake a SWOT analysis
“Most SMEs muddle along in the that evaluates the strengths,
middle without an appreciation weaknesses, opportunities and
of what constitutes a good and threats involved in your business
calculated risk,” says SME venture. “It’s really about ensuring
consultant Dr Greg Chapman, that you understand the risks of
author of The Five Pillars of the business,” he says. A break-
Guaranteed Business Success. even analysis that estimates, for
While the global financial example, how many sales you will
crisis has spooked many people, need to make to recover the cost of
Chapman believes present markets your investment is another simple
offer risk-takers a chance to yet effective tool. “The higher the
succeed: “The rules change and threshold for break-even, the
text :: Sigrid Parker // photography :: getty images

the goalposts move, which creates riskier the venture,” Chapman says.
opportunities.” There are, however,
some key rules to follow before PLAN AN EXIT STRATEGY
leaping into a business risk. It’s important to have a ‘Plan B’ in
place if markets head south or your
MAINTAIN OBJECTIVITY sales are slower than expected. Put
Chapman recommends starting simply, if your venture is floundering
with a clear vision that isn’t clouded you need an exit strategy. Chapman
by subjective enthusiasm for your warns against taking the view, ‘We’ll
business project. “Part of the just throw more money at it because
problem is we fall in love with our it’s going to work eventually.’ “It may
own ideas and misjudge the risk,” not,” he says, “and pretty soon all
he says, so don’t be afraid to get that money will be gone.”

 065 Is equal pay for equal  066 Meet the four mates  075 How a very simple idea is
work still a myth in this country? who are creating a culinary empire. cleaning up Australia and the world.

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