+ Risk What is risk? What are the possible risks with the below? Crossing the road Taking a car journey Skateboarding on the pavement Getting a job as a lion tamer Setting up your own plumbing business
+ Lesson Objectives By the end of the lesson: All of you will able to define ‘calculated risk’ Most of you will understand that businesses need to weigh up the rewards and risks before entering a new business venture Some of you’ll will also appreciate that mistakes can happen in business but they do not always in failure.
+ Why did the chicken cross the road? – RISK! Grandpa: In my day, we didn't ask why the chicken crossed the road. Someone told us that the chicken crossed the road, and that was good enough for us.
+ To risk or not to risk? What will YOU do? Debrief:
+ Risk Running a business is risky Glasses Direct (web based opticians) is risky as many people want to try on their glasses before committing. iPod was less risky as there was already a market for personal music Laser eye surgery Even large businesses take risks that don’t always pay off. E.G: Silverjet – Failure to secure funding.
+ What are the main risks? Some risks are common to most businesses Strategic (Competitor coming into your market) Financial Operational Even well established businesses need to carry out extensive market research in order combat any risks they may face. It maybe more difficult for small start up businesses as they are less aware of how external influences may affect them.
+ What are the main rewards? What drives people to take risks? To become wealthy. In business the bigger the risk, the bigger the return! For the buzz – Some people thrive on the risk of running a business. Being your own boss This is because in business the bigger the risk, the bigger the return
+ How do we minimize the risks involved? Market research Competitors Suppliers Promotion/Place/Packing/Product Finance ESTABLISH YOUR BRAND - which could minimize risk.
+ Peter Jones ‘Research, brainstorming, instinct and action is a very powerful formula. You must also empower your staff to act and take risks on behalf of the business. Sure, mistakes will be made, but without taking calculated risks a business will find it very difficult to exceed expectations’
+ Calculated Risk Calculated risk-taking – not reckless; they are prepared to take a risk in order to maximize the rewards.. Potential costs and benefits have been weighted and considered – How? In business, it is easy to make mistakes and be forced to close, but many entrepreneurs feel that you have to make mistakes in order to succeed.
+ Plenary http://news.bbc.co.uk/1/hi/world/europe/7967253.stm What risks could the machine developer face? Benefits? Disadvantages? Minimize risk?