You know very well that the world of business is dynamic. How do you handle risks and uncertainties? The future is uncertain and what seemed to work very well yesterday is not a guarantee that it works today. Things change anytime and the changes may bring opportunities or miseries in a business.
Planning alone cannot completely free us from risks. Some entrepreneurs get it wrong that if they plan well, their businesses are completely protected from uncertainty risk. Of course, there are some losses that you cannot control. I’m not telling you not to plan. Failure to plan will lead to aimless operation of your business. Have a plan for your business to avoid tomorrow’s crisis and also to know where you want your business to be.
The current markets are full of aggressive marketers who compete to outdo their competitors. If you fail to be alert on what your competitors are doing in the market, then you risk losing customers.
Even though you realize losses brought about by risks in your business, the good news is that you are able to mitigate them. There are several ways you can prevent risks from ruining your business. Probably you know that.
You notice that the marketing process you undertake everyday involves uncertainty risk. If a loss occurs in the course of executing your marketing process, then it denies you profits you were expecting after selling your products.
Three Types of Risks
A.) Changes in the Market Conditions
The change in market conditions result from fluctuations in the market prices. The fluctuation in the market is brought about by three factors, namely; time, place and competition. Let’s discuss each factor in details.
1.) Time Factor
Time plays a great role in influencing prices in markets. If not well managed, then it may bring losses. Producers may manufacture products in large quantities with the anticipation that price increases. The wholesalers and retailers stock these products in large quantities with the same anticipation. But later on, the anticipated increase in prices does not occur in the market.
2.) Place Factor
It is caused when different prices of the same products and services prevail in different markets at the same time. You buy products from one market only to be forced to sell them at a lower price in the selling market hence incurring losses.
3.) Competition Factor
This results into losses if you don’t keep up with the competition in the market. You should be alert on what your competitors are doing in the market so as to influence your business sales.
B.) Natural Causes
This type of uncertainty risk is beyond your control. Are you able to control earthquakes, fire, storms, and hurricane winds? It is impossible and only God is able. But you can mitigate the losses that arise from this type of uncertainty risk.
C.) Human Behaviors
These are the risks that you create in your business. You are absolutely responsible for them. Since you are the creator, you can control them from occurring. Bad debts, shoplifting in your business and thefts are examples of this type of uncertain risk.