Two Ways for Business Owners to Manage Risk and Avoid losing money
One habit that separates successful businesses from unsuccessful ones is managing risk.

First, set a stop loss and don’t invest a cent more than your stop loss. A stop loss is the amount of money you will commit to the business before calling it quits. If you reach your stop loss, it is time to move on to other opportunities.
This also applies for advertising. You must track each advert to see if you are getting a return on your investment. Too many businesses have an advert in the newspaper week in and week out and have no idea if it actually generates any sales.
For instance, the best gamblers bring a set pool of money to the table and quit if they exhaust that pool. Meanwhile, less sophisticated gamblers keep adding money to the pot, thinking that they will eventually catch up. It is these gamblers who lose their houses and families and are addicts. How many businesses are just like that? Paying more for adverts and has no way of knowing if they are getting a return on their investment.

You might be thinking, well we have done this for years and I like the marketing we are doing. But the bottom line is if the numbers don’t justify continuing, the bottom line should come before ego in business.

To set your stop loss, consider everything you need to invest to get the business started. Then double it. Remember it will take three times as long and cost twice as much to become a successful business than you planned for.
Second, spread your risk. Ask people with a stake in the business to contribute capital, time, or resources. For instance, joint promotions for a financial planner, real estate, loan broker and lawyer business.

Your suppliers, clients and your direct competition can all help your business by joint marketing.

All four of you have the same clients and by working together rather than competing you share costs and gain multiple referral sources. If you can’t find people to share the risk, then it is likely that your concept or business model is not very sound.

Author's Bio: 

Brian Leonard Lucas
M.FinPlan, CFP, Dip.Fp, CPMgr.EO

CAREER HIGHLIGHTS
• Guest Speaker New Delhi University New Delhi India 2008
• Masters Degree in Financial Planning 2004
• Asset Sales and Marketing Award 2007
• Olympic Torch bearer 2000
• Professional Development Recognition Award 1999
• Guest Speaker AMP International Conference, Cancun Mexico 2002
• Guest Speaker Financial Planning Association CFP National Conference 2006
• Entrepreneurs studies graduate Hong Kong University 2001
• Guest Speaker AXA Conference Hong Kong 2007
• Author “An Extraterrestrials Guide To making a Dollar”, “20 Steps to a high profit business” , “37 Mistakes managers make” and “Double your Success in 12 months”
• Runner -up Australian Humorous Speech competition 1993
MEMBERSHIPS
Financial Planning Association (member)
World Entrepreneurs Organization (President 2006/08)
International Coaching Federation (member)
Business Class Corporate (member)
National Speakers Association of Australia (member)

Brian has worked for several large organizations including Woolworths, Hungry Jacks, Pennywise and Bilo supermarkets, before starting several successful companies. He recently has been awarded as President of the Entrepreneurs Organization and sold his share in the financial planning company Kensington Financial Services. He now runs two of the fastest growing small businesses in South Australia: Proper Financial Advice (Financial planning) and Proper Advice (Guaranteed success Business Coaching). He has given hundreds of speeches around the world on Entrepreneurialship and increasing profits. A regular guest commentator on Radio, Brian also is a leading charity fund raiser in South Australia.

He has written four best selling books on Management, increasing profits and financial planning. He is also a lecturer at the Australia Institute of Business Administration for their MBA course.

He is a graduate of the Hong Kong University Entrepreneur studies, has a Masters in Financial Planning, and is a Certified Financial Planner and competent Toastmaster.
Working closely with the State Government “Thinkers in Residence” program, Brian has advised the Premiers Department on small business.