Читать книгу Risk & reward - Thabani Zulu - Страница 9

If you reflect on it for a moment, your business is a risk from the day you start it to the day you get out of it one way or the other. In this book I will be discussing the risks and strategies to manage them in successive chapters, and covering the topics below:

Product

What if I go into business with the wrong product?

What if my product does not sell?

What if there is no sustainable market for my product?

Partnering

What if I get the wrong partners?

What if the structure of my business is wrong?

Finance

What if I cannot raise capital for my business?

What if the finance I get is too expensive for the business?

What if I do not make a profit?

What if my costs go up?

Competition

What if my business is wiped out by competitors?

What if the market prefers to buy from the competition?

Employees

What if I employ the wrong people for my business?

What if the employees go on strike?

What if the employees become redundant and costly?

Suppliers

What if the suppliers go out of business?

What if the suppliers take long to deliver?

What if the suppliers are expensive?

What if the suppliers deliver poor quality?

Taxes

What if I get on the wrong side of the law?

What if I fail to pay or declare my taxes?

The following diagram gives an indication of the risks to which a typical business is exposed in its life cycle:

INCEPTION ➞	OPERATION ➞	DISPOSAL
Sector Valuation Finance Security Competition	Cash flow Losses Transport Suppliers Market Human resources Environment Taxes Legal	Valuation Economy Buyer availability

I think we need to ponder on each one of these risks. You will see from the above diagram that there are just so many factors that can cause a business to collapse. Many are still missing, I am sure, but I have tried to capture those risks I would consider significant. Each risk may be so significant that it exerts strain on the business throughout its life. For instance, if you enter into an inappropriate finance contract, it can cause stressed cash flows and sustained losses, and, even on disposal, affect the valuation of the business so negatively that the buyers pick it up for next to nothing.

I had a business that was badly financed and structured. Every day was a battle, and every cent that I made seemed to be swallowed up by finance costs. The infrastructure was bigger than the operation. There was no way of getting out because of the unfavourable contracts I had entered into. Cash flows were severely strained and the business was eventually liquidated by the financiers, where it was sold under the hammer for a pittance. As I write this book, I am still recovering from the aftermath of my bad risk management! You would be wise to learn from the voice of experience and not let it happen to you.