7 Risks Every Entrepreneur Must Take

Risk-taking is almost synonymous with entrepreneurship. To start and support your own business, you’ll have to put your career, personal finances and even your mental health at stake. 

For most, the prospect of making your own decisions and being in charge of your own destiny is worth it. But if you’re going to be successful as an entrepreneur, you have to be prepared for the risks and challenges that come with it.

The following are seven risks that every entrepreneur must take, from ideation to ongoing development:

1. Abandoning the steady paycheck.

Before you venture into the world of business ownership, you’ll first have to say goodbye to your current job, and in some cases, your career. Some people have the luxury of a backup plan -- an option to resume your career in case things don’t go well in your independent business.

But for most starting entrepreneurs, the choice is a risky plunge. There’s no guarantee of your personal income, especially in the first few months and years of your company’s existence, and you’ll probably be too busy to secure or sustain an alternative line of income.

2. Sacrificing personal capital.

Some entrepreneurs are able to start their ventures relying solely on external funding. That usually means a collection of angel investor contributions, government grants and loans, and results from crowdfunding campaigns. But many entrepreneurs also have to dive into their own bank accounts and personal savings to get things started.

You may not need to completely liquidate your nest egg, but you will have to front at least some personal money -- and that means abandoning, or at least diminishing, your safety net.

3. Relying on cash flow.

Even if you have a line of credit, securing a regular cash flow is difficult and stressful. You can position yourself for a profitable year, but still struggle with the day-to-day necessities if your revenue doesn’t match or exceed your costs in a timely manner.

Bills can add up quickly, and if you don’t have enough revenue to support your outgoing cash flow, you could run short of money for paychecks or be forced to dip into emergency funds. Be prepared to address it daily, or at least weekly.

4. Estimating popular interest.

No matter how much research you do or how many tests you complete, you’ll never be able to estimate popular interest in your business with perfect accuracy. People are somewhat unpredictable, which could put a giant hole in your otherwise sound plans.

Even when all the data appears to be in your favor, there’s a chance you’re overestimating the interest in your company, and if your projections are off, your entire financial model could implode.

5. Trusting a key employee.

When you first start a business, you won’t have a full team of employees working for you. Instead, you’ll probably have a small, tight-knit group of people working tirelessly together in an effort to get things up and running. You’ll have to put an overwhelming amount of trust in them, especially if they have special skills that are hard to find and are willing to start work at a lower salary than the industry standard.

For example, if you hire a single, experienced lead developer to work on your product over the course of a few months, you’ll need to have absolute trust in their ability to get the job done on time. Otherwise, your timeline (and your product) could be fatally compromised.

6. Betting on a crucial deadline.

Startups are, by nature, forced into strict timelines for their product launches and milestone goals. Their finances are fragile, and their investors are eager to start seeing the wheels turning. As a result, most entrepreneurs are forced to make multiple goals contingent on a handful of deadlines, and those deadlines become absolutely critical.

Be prepared to stay up at night worrying about your ability to hit those deadlines, and coming up with contingencies if you cannot.

7. Donating personal time (and health).

Entrepreneurship takes a toll on the average person. You’ll spend countless hours doing work to make your company successful, and your remaining hours worrying about what you have or have not done thus far. You will lose sleep, you will miss out on personal time, and you will experience much more stress than usual.

The rewards of entrepreneurship often outweigh these personal risks, but you have to be prepared to live this type of lifestyle.

Risks shouldn’t steer you away from pursuing entrepreneurship. Instead, see them for what they are: necessary obstacles on a greater path. There’s no way to avoid the risks you’ll face as an entrepreneur, but by recognizing them, you can prepare for and mitigate them.

From Entrepreneur

5 Rules for Making the Leap to Full-Time Entrepreneur

If you want to launch a startup, you need need to totally commit yourself financially and time-wise.

Some people simply can't leave a relationship--no matter how bad it is--until they're certain they have the next one locked down. This leads to sometimes months of overlap, "should I or shouldn't I?" internal debates, and tiptoeing over blurry lines. That's time when they are not giving 100 percent to anyone (including themselves).

The same can be true of entrepreneurs. Yes, it's scary to let go of your other sources of income and dive headfirst into startup territory. But you have to take risks if you want to fly.

There's a reason the sharks on Shark Tank often ask entrepreneurs if they have another job. Some people who appear on the show respond with a hearty, "Yes!" thinking it shows dedication and hard work. That's not what investors want to see. They want you to see you are fully committed to your project--because if you're not, why should anyone else be?

Here are a few rules for making the leap to full-time entrepreneur for good.

1. Build a Nest Egg

It shouldn't take the possibility of launching a startup to get you into emergency fund savings mode. However, as an entrepreneur, those emergency days are much more likely to happen.Save up at least six months worth of living costs--and preferably enough to last more than a year. Not only will this give you a buffer, it'll teach you how to scrimp, save, and get creative with frugality. All of these are important tools for an entrepreneur because finances for a startup are often slim. I've done this over the past year to save up for the free hosting company that I'm starting. This helps my wife to have cash in the bank to pay the bills until I start making my millions.

2. Give Yourself an Aggressive Timeline

The moment you start saving, give yourself an "all in or out" timeline of no more than 18 months. If you can't save at least six months' worth of finances in 18 months, you have bigger problems than drafting a business plan. Either you need to work on your money management before becoming a full-time entrepreneur, or your heart's not in it. Either way, it's a red flag.

3. Cut All Job Ties

Is your company offering you telecommuting options, flex-time, or a part-time gig? Maybe you're thinking about picking up a weekend job in retail and going back to your roots. A part-time job can be just as demanding and stressful as a full-time job. It's a crutch for an entrepreneur and will distract you from your endeavors. You don't need it. You should be devoting every minute of your available time to your startup.

4. Don't Expect Support from Everyone

Even if they don't blatantly say it, not everyone in your circle will be supportive. Expect questions like, "Shouldn't you at least be working part-time?", "What are you going to do if you don't make money?" or "Are you sure that's a good idea?" Whether these questions and concerns come from a genuine place or not, it doesn't matter. Grow a thick skin (a must for entrepreneurs) and surround yourself with truly supportive people.

5. Spend those 18 Months Drafting Your Business Plan

The business plan is the most important pillar for an entrepreneur. It's where you work out worst-case scenarios, plan for speed bumps before you meet them, and where you begin researching networking and investor options. You don't want to turn in your two-week notice without a solid draft in place.

A real entrepreneur is at it full-time--and much more than 40 hours per week. If you're only in it half-time, you'll only produce 50 percent of the results. Don't shortchange yourself or your business.

From Inc. Magazine

How to Start a Business–Today

Start quick. Don't spend much. Learn as you go.

There is a reason seasoned entrepreneurs don't think of themselves as risk takers, even though everyone else does. They have developed terrific ways to limit potential losses as they start new ventures.

They adhere to the basic principles of risk management: If you're going to play in a game with uncertain outcomes--such as starting a new business--then you never:

1) Pay/bet more than what you can expect as a return, and

2) Pay/bet more than you can afford to lose.

Both of those ideas can be summed up with the phrase Acceptable Loss, a concept where you consider the potential downside of whatever risk you are about to take--such as starting a new company or some other venture that is going to consume a lot of your time, capital, or other assets--and put on the line no more than you find it tolerable to lose should it not turn out the way you want.

What has worked for these successful entrepreneurs will work for you--providing you understand this is NOT how we were taught to think about risk.

I used this example in a book a couple of years ago. Let me reprise it here to underscore the difference about what used to work (and no longer does) and what to do today.

Let's see how Acceptable Loss plays out in practice.

Consider the case of a man in his mid-40s who is thinking about quitting his high-paying job to start his own company. If our potential entrepreneur were to follow the typical reasoning governing risk we have all been taught, he would do in-depth research to estimate not only the size of the market, but also all the risks and challenges he might face (competitors, changing market conditions, etc.). The more potential risks/challenges he believed he was up against, the more money he would raise, to help offset the uncertainty.

Given all this, he might say, "I'd better do a business plan. (Months, maybe years, pass while he does research and prepares the document.).

At the end of that time he says, "it looks like I need $1 million total to start my idea of creating a service that matches recent MBAs who have a scientific background with high-tech employers. (Creating and maintaining the database is going to be a huge expense.) My projections show I'll break even in two years. I can put in $100,000, which is all the money I have saved and can get from family and friends. So, I need to raise another $900,000 before I can start. That's assuming I can live without a salary for two years, and that I'm okay giving up all the money I would have made at my day job.

"Let me think about that over the weekend." (Some 72 hours later:) "Okay, I'm in. Let me start raising that $900,000."

In contrast, for someone using Affordable Loss reasoning, the idea of getting underway is far more important than having a fixed goal, because they understand they have no idea of knowing ahead of time whether their idea will truly work as imagined.

So, their interior monologue sounds like this:

"I am 46 and I am just not certain how long I am going to have a job. I've always wanted to be my own boss. By drawing on my own resources, and borrowing from family and friends, I have $100,000 I can commit to finally going off on my own. I need $50,000 for expenses and $50,000 to live on for the next six months until I get some revenue. In the worst case, the company I start goes under and I lose every dime. If that happens, I'm out the $100,000 and go back to my old job--if it is still there--or I get a different job within the industry and figure out a way to pay back everyone I borrowed from. I am willing to risk that. If I end up losing the money, so be it. It won't be the end of the world.

"But, if I don't take this risk now, when am I going to do it? I don't want to wake up 20 years from now and be one of those people who talk about 'what might have been.' It's a sad thing to have regrets about something you wanted to do but never did. Even worse would be being fired 10 years from now when I will probably be too old to be hired by anyone else.

"My family is on board with me taking the risk, and while I know every new venture is a crapshoot, I feel pretty good about this. I am going to do it and adjust on the fly if I have to. My basic premise is right. There is an unaddressed opportunity to serve the MBA market. I think the job matching idea has a lot of promise, but if it turns out a website is better, or a newsletter or whatever, that's what I'll do, once I am underway."

I doubt there is any reliable formula that can provide security when venturing into the unknown and make it more likely for a particular effort to succeed. But there is absolutely no doubt that Affordable Loss will reduce the cost of failure (should there be one).

If you fail, you fail cheaply. That means you still have some resources left to fight another day.

From Inc. Magazine

5 Ways Being Too Nice Can Hurt You

Kindness is always in style, but being a pushover can hurt you in many different ways. Here's a list.

"It is always in your favor to be nice; it is rarely advantageous to be passive," Quora user Courtney Bryant wrote recently on the question-and-answer site, adding: "A blend of kindness and assertiveness is a magnificent cocktail."

But what happens when you get that recipe wrong, mixing in too much deference for others and not enough hard-headed pursuit of your own goals? That's the topic addressed recently on the site in response to the question "What are the disadvantages of being too nice to people?" from a confused Quora user who admits to being baffled about where to draw the line between admirable niceness and problematic passivity.

In response, Bryant and a handful of other thoughtful respondents offered wisdom on how to know if you're attempts to be nice have crossed the line and qualified you as a pushover, as well as warnings about the dangers of taking your (entirely admirable) urge to please others too far. Though there was broad agreement that kindness is always a virtue, a consensus emerged that there also is such a thing as too nice. Here's what the community felt could go wrong if you take being a sweetheart too far.

1. People will see you as weak...

... and take advantage. This first point is no shock. This is generally the rap against being too quick to put your needs aside in favor of the needs of others, and many, many respondents pointed out this danger. "You can never be too nice to people, but you must nonetheless, be vigilant, as some will see it as a sign of weakness and try to take advantage of you," warns Quora user Christopher Kosel in one representative answer.

2. You forget to be nice to yourself

"Being nice to others is good," says student Shilpi Singh in her answer, but don't "forget to be nice to yourself!" This is also the problem with being "too nice" that is often cited by experts on entrepreneurship. Being responsive is great for your business, but take your focus on meeting others' needs to far and you'll end up with no time left over to work on your own priorities or the longer-term issues that are essential to your company's health.

Struggling with balancing being there for your customers and employees and having time for long-term strategy (or your own physical and mental health)? You're not alone. Thankfully, there's a boatload of good advice out there on how to set be more strategic about your time useand say no firmly and fairly (including exact language you can use for different situations).

3. You attract the wrong kind of people

Kindness may be a prerequisite for healthy and meaningful relationships, but an utter inability to set boundaries can come across as an invitation to those with draining emotional needs, cautions poster Borang Touch. Be excessively nice and "you will start to attract needy, whiny, overly emotional, demanding/controlling, 'guilt tripping you if you don't do something for them' types of people," she writes.

4. Some people will distrust you

Let's face it, genuinely nice people aren't rare, but especially in some corners of the business and professional world, they're hardly in the majority either. This sad fact means that if you are truly nice, you're liable to be occasionally misunderstood and even viewed with suspicion, claims author Anila Syed. People will "believe that you have an ulterior motive in mind, otherwise, why would you be doing all these special things?" she warns. "Just as there is no such thing as a free lunch, there can not, surely, be such a thing as 'too nice' for no reason," according to these doubters.

5. You'll warp your expectations

Being endlessly selfless can skew your perspective, according to computer science grad student Vignesh Natarajan, leading you to expect others to put their interests aside for you just as you would for them. "If someone is too nice to people, they start expecting unreasonable amount of niceness from others as well. This always leads to the nice ones thinking others are being mean to them or taking them for granted," he writes. "A lot of people cannot handle this and when they talk about how they're nice to everyone while others take them for granted, they tend to sound very entitled."

From Inc. Magazine

3 Amazing Mind Tricks to Help You Remember More Information

Here are three tricks to remember information, especially at seminars and conferences.

It's all in your head. No, really--your capacity to remember the name of a new investment company, which products are going to present the fiercest competition for your startup, and how to find that bistro downtown where you are meeting a new employee is part of the untapped potential in your brain. Let's dispense with the old "non-truism" that we have only tapped 10 percent of the capacity in our brains. Cognitive scientists doubt that's true.

What is true, though, is this. You can teach yourself to remember details about your day and recall that information when you need it most. Like, say, when you are about to present the case for why someone should invest in your company or that the new employee in your company is named Greg. I've used these tricks before, especially during business conferences when I can't jot down a reminder or record a memo on my phone.

1. Say the information out loud five or six times

I can't say there is any proven science behind this trick, but I have used it many times at CES in Las Vegas each year when I really wanted to remember a new company name. There's something about saying the information out loud a few times that works for me. You might repeat the name and location of a new investment company, or the widget you noticed on the show floor. It seems to help if the name is unusual, like Twitch or Uber. Maybe it's because you are hearing the information and speaking it or because you are isolating that information in your brain as separate from things you've read and only heard. Either way, it works.

2. Associate the information with one other thing

I recently had a meeting near downtown San Francisco and, just as I was driving to the location across town, I realized the GPS on my phone was directing me to the wrong address in the same area. I didn't have time (or the guts) to pull over in heavy traffic to look up the company name, but it wasn't a huge problem. I had memorized the street name. It's a good backup technique I use, because this seems to happen quite a bit. The company was on Gilbert Street. When I read the address at my hotel, I thought about the composers Gilbert and Sullivan and how they made comic operas way back in the 1800s. I'm not sure why, since I'm not even a fan of their work, but it worked. I spoke the street name to Siri on my iPhone and set that as the new destination in San Francisco. Eureka, instant recall. And, close enough--it's a short street.

3. Create a list of items with the thing you want to remember on the list

This one last trick I use at business conferences and seminars routinely. Sometimes, it helps to take a bit of information you want to remember--like the name of a new mobile app or a new contact--and mentally make a list of a few other related items. Let's say you want to remember the name Lyst, the fashion site that is creating buzz in the mobile shopping space. You'd create a list (no pun intended) of other well-known retailers, such as Macy's and Best Buy, and then recite the list. Maybe it's the fact that we all make shopping lists for eggs and milk or the fact that our brains remember information in lists better than isolated items. (That might even explain the incredible popularity of list articles like this one!) I've used this trick before, and it works, especially if the items are a bit unusual.

From Inc. Magazine

5 Things You Should be Doing to Have an Insanely Productive Week

A productive week depends largely on what you focus on every working day and how much time you allocate to activities that take up your time (i.e. busy work). Working harder does not necessarily mean you are being productive. There will always be a better way to complete that task. Find it, work smarter and get more done in your working week.  

These are a few things can do to have an insanely productive week this and every other week.

1. Stop planning, start doing. 

It's okay to make time to plan what needs to be done in the week or month but when you get back to the planning table often, you lose precious productive hours.

So instead of plan, just do it. The option to work on a task in the future instead of now seem comfortable but not prudent. While you keep telling yourself you don't have to do it now, that task won't go away. And somebody will have to eventually account for it. So instead of procrastinating, get on with it and check it off your to-do list.

Also, are your meetings really worthwhile? Most people spend too much time in meetings, when they should be working and getting things done. To ensure you are making the most of your time, create a time budget. This will help you realize how much time you are losing to meetings or planning when you should be doing actual work. You will be surprised at how much you can get done every week if you start tracking how much time you spend planning or meeting.

2. You don't have to say "yes" to every request. 

“The difference between successful people and very successful people is that very successful people say “no” to almost everything.” — Warren Buffet.

Saying "yes" to a request seem easier than a simple "no". Yet every time you agree to do something for somebody that brings low or no result, it makes it difficult to have a schedule you can really control. You don't want that. You can achieve more if you know what you have to do, when you have to it and what you expect to accomplish. All that can be done in controlled schedule.

3. Don't be a perfectionist. 

If you keep chasing perfection, it could take you longer to get your tasks done – and you will most likely be less productive than you planned. The reason being is when you activity strive for perfection you spend more time on a single task than required, causing your other responsibilities to get pushed back. This will cause you to lose time and possibly annoy your immediate boss in the process. Perfectionism is even higher when you don't account to anyone but yourself, as the fine tuning never ends.

4. Get everything out of your head. 

Don't rely heavily on your memory. It will fail you when you need it most. Instead, write things down.

There are hundreds of options for taking notes -- everything from the good old sticky notes to applications like Evernote, Any.do, and Wunderlist. By jotting down everything that needs to get done in the week, you will have a better picture of what needs to be accomplished – and set priorities accordingly.  

5. Review and measure your accomplishments. 

Just before you close the week and prepare for next week, review your achievements, along with everything else that needed to be done, to see if you really got work done. Get back to your to-do list and check them off and find out what you were not able to do and why. Celebrate your accomplishments, take note of everything you postponed and learn from your mistakes. You will be better prepared for the following week. 

From Entrepreneur