Wednesday, April 10, 2013

Risk of Business

When you need to start a business, are you considers the risk of business.  That is not simple as you think. Especially those people who need to start private limited operate the business. In my opinion, the boss should consider 3 major risk: -
a)      Capital Risk
b)      Government Policy Risk
c)       Management Risk
The abovementioned risk included a lot of uncertain issue, there also comprising many small risks. Like
a)      Capital risk
As a investor start a business require capital. So, the money maybe borrows from friends, family or relative. Some others raise funds from financial institution. The pressure derive from refund due date and then always cause the business face the cash flow problems.  The activities of business always subject to how fast you can close the deal and so receive the yield back into your company. If one of the deal close without any cash return, it could not said you has been successful on such deal. Because anytime it can be turn as bad debts or loss the gross margin because of opportunity cost ( Like bank interest or another new business deal). So monitoring the cash flow always is priority concern in the business activities.  Other than that also some business require a heavy investment on capital expenditure, like Power supply business, development or Infrastructure or development of new IT or research the new medicine and so on…..) Such business in the few stages do not give you any return or revenue, so the pressure on such sometime make a good idea ceases in between.
b)      Government Policy Risk
Every country owned difference of policy for business activities. So the company may face various rules and regulations bind it. That also brings a corporation facing heavy local tax, law or restricted activities or levy tax or structure of shareholding and then the corporation also need to fulfill difference type of tax and labour law to expand and uncertain period of audit from those local authority.
The above issues can bring a corporation loss everything and then shareholder in the trouble. Without such knowledge on authority department make those directors and shareholder may hold high risk to against the law.
c)       Management risk
In the corporation, key personals with difference views for company vision require a big capital to satisfy all difference type of projects. If one the projects fail can make the management loss focus on main duty.
The workers loss direction on company main project also is a management risk.  If the circular system  too complicated or complex or documentation misplace or loss also can cause problems.

As a boss of one company or an investors of one company. That is difficult task to ordinary people. You must listen, action, performing as well as with good attitude. Not only such, you also must have change and flexible.  If you have educate with professional course, you are hardly to understand one business man. That’s true.!!!!!!      

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