Small businesses are failing at a concerning rate. In a recent study published by the Business Magazine, it was revealed that 50% of all American start-ups failed to survive for more than five years. Identifying and mitigating such risks of shutdown has to be the first commercial strategy of all small businesses. Discussed below are key recommendations for entrepreneurs to reduce the risks involved in launching a new business.
1. Never mortgage your personal assets
The option of mortgaging your private assets such as your home or your life savings on your business is only considered when all other key sources funding are made inaccessible for you. If several banks and funding sources have rejected to back your project, a lot of consideration must be put into determining whether or not your venture is actually financially viable before you dip your hand into your savings account. After all, if most banks are refusing to fund your project, there must be something wrong with your commercial plans, expected cash returns, your credit score or a mixture of all these factors.
2. Adjust your commercial strategy to match your accessible funding sources
Your business strategy may be to launch 10 locations across the state you reside in, but if your business doesn't have sufficient funding to construct these locations, then your idea is just a day dream. Adjusting a commercial plan to match accessible capital backing does not trim down your grand idea; it just makes your ideas a lot more realistic.
3. Collaborate with a steady banker
When launching a business, applying for a commercial loan is the first step entrepreneurs must take. A banking connection has to be one of the entrepreneur’s most reliable, most friendly relationships, comparable to the relationship a new business has to have with a lawyer and an accountant. Good bankers and banking institutions do everything within their rights to keep a new business from falling apart.
As a banker's commercial clientele increases in number, their parent banking institution becomes more inclined to looking out for the rights of their clients. A trusted banker will always wish to make sure that their client’s financial strategies and reports are in line with the requirements. Bankers can also prove to be an invaluable source of financial advice. Investing in such a relationship is the key to having a solid basis for strategic financial decision making.
4. Fund your own development
Funding your own development takes incredible discipline. Once the profits start rolling in, the desire to spend these profits is hard to look away from. However, reinvesting these profits back into the business is the best way to suffuse the capital required to further develop the business without experiencing the types of debt that usually leads to the shutdown of small businesses.
Contrary to popular belief, walking up an infinitely high financial funding ladder isn’t the only way to become a successful small business entrepreneur. Typically, entrepreneurs thrive by mitigating risks, not overlooking them. By taking calculated risks and being cautious in every business decision, entrepreneurs can indeed embrace success.
Reducing the risk factor should be one of the most vital commercial strategies for small businesses. Apart from avoiding a mortgage of their personal assets, entrepreneurs should also reduce risks through steps like collaborating with a banker with a good reputation and spending profits in further development. Reducing risks is the key to success.

Author's Bio: 

Reshali Balasubramaniam
Head of HR, HR Counselor and adviser at Do you offer a Service? Signup for an account at