In this millennial generation, entrepreneurship has been the top choice for this generation, I have noticed, even among those who graduated from non-business college courses. This generation is looking not for bosses but coaches and advisers to guide them. Also, they are more conscious about creating a meaningful impact on social enterprise and social improvement, which I find good, and even better, for our nation’s economic growth.
Rewards from being an entrepreneur
Being an entrepreneur provides a lot of rewards in return. First, you own your time, which means you don’t have a fixed time to come in and leave the workplace. You design your schedule of work. Second, you are your own boss. You work for the best interest of your targeted goals and objectives, and not for the goals of others. Third, your income is not fixed. You can receive a variable income that can go up to as much as your revenue can support, but sometimes, also lower than what you desire depending on your business performance.
From our observation in our community, successful people are mostly entrepreneurs. They do not see themselves as employees who work for others’ best interest. They work for their own goals and the betterment of the community by providing opportunities for others.
Risk in being an entrepreneur
If there are rewards, there are also risks to being entrepreneurs. Majority would, of course, want to always think of the rewards. Risk is oftentimes overlooked. But an old saying goes, “always look for the reward and always prepare for the risk.”
Risk can come in different forms. One major risk could lead to the downfall of a business, though it could have been controlled and avoided by the management and the staff. There are four major internal risks that have always been present in business but which can be described as beyond anyone’s control. We can sum them up as: death, disability, disagreement and retirement. These four things are beyond our control. Death and disability can happen anytime, anywhere, and to anyone, no one has any guarantee of an exemption. These risks are the most fatal for a business. It can cause the collapse of an enterprise in a blink of an eye. Also, on top of the four, we can consider these other risks:
• Strategic business risk – Risk that affects the continuity of business operations, more specifically refers to Family Constitution and Estate and succession planning, among others. This involves, if we’re talking about family-owned business, proper planning for members of the family. If non-family owned, it involves proper business agreement on all the important aspects of the business that involve this risk.
• Compliance—Deals with risk related to compliance with laws, regulations and other standards required for the business to operate legally.
• Financial—Deals with risk related to protecting your business in terms of accounting, audit and corporate finance matters.
• Operational—Deals with risk related to the day-to-day operations of the business. More specifically, we deal with ensuring the retention of quality manpower, proper retirement planning among others.
Your exit strategy
The first step is to acknowledge the fact that all the above risks are present in our day-to-day lives. Neglecting it would be a shortcut to the failure of your enterprise. Second, know how much would be the equivalent monetary value of each risk. If you are having a hard time planning for comprehensive risk management, hire professionals who can take care of this matter. Hiring someone would save much of your time. You can look for a lawyer, accountant, or a financial professional who can help you create your exit strategies. Thirdly, implement the things that need to be done. Do not put your life in peril in the hands of luck. We cannot eliminate risk; we can only prepare and protect our enterprise against the consequences when it takes place. Always think through on the things you haven’t covered yet.
Wishing you all the best and success toward financial freedom and peace this year.
Serge Barcenas Bargayo is a Registered Financial Planner of RFP Philippines, based in Cebu City. Learn more about personal financial planning at the 59th RFP program this January 28. To inquire, email firstname.lastname@example.org or text <name><e-mail><RFP> at 0917-9689774.