Entrepreneur: “a person who sets up a business or businesses, taking on financial risks in the hope of profit.”
The very definition of entrepreneurship is taking on risk…
Often one of the reasons we decide to start a business is that we are prepared to take on risk for the chance of a high reward.
Maybe that reward is time freedom, maybe it’s financial, perhaps it’s doing something we absolutely love. Whatever that looks like for you there’s no doubt we risk our time, we risk our capital and sometimes our sanity in pursuit of that goal!
But How Can We Manage That Constant State of Uncertainty?
The real question is; how can we become comfortable with uncertainty? How can we position ourselves to eliminate some uncertainty yet still keeping the upside potential we are all in this business for?
If uncertainty frightens you then you are probably better off in a well-paid job working on a career in a large corporation.
We are all wired differently, and there are many people happily working in a job they love taking home a good salary.
But if that doesn’t get you excited and nothing but entrepreneurship will scratch that itch then read on…
Consider Building a Business Model That Reduces Uncertainty
Some business models are inherently less risky than others. (I say that with caution because nothing is without risk,) but consider for a moment two different businesses in the design and marketing agency world.
The first business does one-off jobs for clients, the sales team finds a lead and attempts to convert that lead into a sale. They turn over a decent amount, but each month they need to find new business.
The second business provides multi-year service contracts for clients. The sales process is the same but this time when a deal is closed, it’s a recurring revenue contract rather than a one-off payment.
You can see right away that the second business eliminates a lot of uncertainty. They are locking in guaranteed revenue each month. The whole business has reduced risk, unless a client goes bust or just refuses to pay money will keep flowing. There’s a level of certainty to the cash flow.
The first example however needs to generate new clients each month, one blip in the process and that month’s income might suffer.
So, if possible consider how you can create a monthly subscription/recurring revenue type model or offer in your business.
Create a Predictable Lead Generation and Sales Model
This is easier said than done…
But something that can take out the uncertainty around revenue and income regardless of your business model is building a predictable way to generate leads and turn those leads into sales.
That could be via organic traffic – focusing on your SEO, working social media or building an audience on YouTube or a podcast.
Simply knowing that you have a specific number of site visitors each month that turn into leads and ultimately clients can give you some security and baseline revenue.
It could also be via paid advertising. Paying for ads online and pushing people through a funnel that converts and generates revenue over and above your ad spend.
Perhaps it’s something different like strategic partnerships, referral schemes or even trade shows.
Of course, none of these is completely free of risk. Google might move your site ranking, ads might stop working, we might even have a global pandemic stopping trade shows…(!)
But you can see that having multiple predictable ways to generate revenue can reduce the risk and put you at peace with the uncertainty. Knowing you are most likely going to have a baseline of revenue each month makes the risk and uncertainty more palatable than starting from £0 each and every month.
You can never completely remove uncertainty and risk from a business. That’s part of the deal, but strategic positioning and planning can dampen that emotional roller coaster somewhat. It won’t happen overnight but over time business life can become less chaotic a bit calmer and your revenue more predictable.
As always, give us a call if you want some help with building more predictability and sustainability into your business.