Everyday we take risks; in the business world profit comes from taking risks. A risk is simply the possibility of damage, injury or loss. Because of these risks it is very important that business owners and entrepreneurs have a back up plan in case something does happen and by doing this they show that they are aware and ready to face any potential risks that may arise.
Common risks that almost all business’ face include competition, price and style changes, and changes in the economy. There are two kinds of primary risks that and entrepreneur will make, speculative and pure risk. (Entrepreneurship)
Speculative risk is the uncertainty as to whether an activity will result in a gain or a loss. Examples of these risks are building a plant that you later find out is the wrong capacity, or having a building that is too large or too small to maintain your inventory. Speculative risks are unavoidable and play a constant role in the private enterprise system. (Entrepreneurship)
Pure risks are the uncertainty as to whether some unpredictable event that can result in loss will occur. Pure risks results are always a loss and never a gain.
Examples of pure risks include fire, flooding, deaths of key employees, or customer injuries on business owned property. Pure risks differ from speculative risks because speculative risk has the possibility of both gain and loss whereas pure risk only results in loss. (Entrepreneurship)
Now that you have a plan all set to avoid risks for your business what are you plans to ensure that you personally will have a successful future which will one day lead to retirement. Well the key to that is a financial management plan. First you need to set some smart financial goals that will help you get where you want to go in life, these goals are a guide to personal, career, and financial success. A successful management plan includes:
- Wealth Protection
o Cash Management
o Emergency Cash Reserve
o Risk Management
o Tax Management
- Wealth Accumulation
o SMART Financial Goals
- Relevant & Realistic
o Credit Management
o Home Ownership
o Children’s Education
o Retirement Planning
- Wealth Distribution
o Estate Planning (Successful Financial Management)
All businesses and personal financial management face some kind of risk and there is no way to completely avoid them. Different management procedures can help minimize how hard you or your company is hit by a loss but no procedure can eliminate risk entirely. Both successful businesses, and successful financial plans must be able to notice all kinds of risks and be able to take preventative actions to reduce the damage they will cause to the company or else all your hard work and dreams can be lost in an instant.
Entrepreneurship Education. Homepage.
Retrieved Entrepreneurship Education Web site: http://www.entre-ed.org/_teach/busrisks.htm
Successful Financial Management. Homepage. Retrieved from Basic Building of Successful Financial Management Plan Web site:
Wikipedia.. Homepage. Retrieved from Stock Market
Wikipedia Web site: http://en.wikipedia.org/wiki/Stock_markets