The most important consideration for becoming a self employed entrepreneur or small business owner is risk. Of course, anyone with the entrepreneurial mindset is unafraid to take a risk. The successful ones, however, take the calculated risk. The failures, of which there are over 600,000 every year according to the SBA, are the ones that take the reckless risks.

• A major part of your risk mitigation strategy needs to be a transfer of that risk into certain insurance coverage. You must, of course, understand the risks inherent to your particular business and industry. When putting together a coherent insurance plan you must identify and understand those areas where you can mitigate risk through insurance. For example, you have a bakery. You likely have some manner of business interruption coverage as well as being covered for loss or destruction of your equipment and inventory. But, have you mitigated the potential risk of having your website host’s server crash?
• Insurance should continue to be your major go-to mitigation strategy. As your business grows and changes and as economic and market forces change, your insurance coverage needs to change also. You are not the business you used to be. Are you insured against your new set of risks? What are those new risks? What is different this year from what it was last year?
• Are there certain employees that are so integral to the success of the business that you simply can’t afford to lose them? Could you replace them if you lost them to injury or a competitor? Consider some key person insurance and if you already have that, review it and make certain it is up to date with the current state of the business.
• Cash flow is king in any business. If business is interrupted for any reason, you need to be covered. If the business has to shut down due to a natural disaster, you need to be covered. Proper and far sighted cash flow management is the key to your survival. So is a six month cash reserve to cover your operational costs should disaster strike.
• Thinks about indemnifying yourself with those business alliances that are key to your success be they distributors, clients, or suppliers. It can prevent lawsuits in the future and those are a risk you just can’t afford.
• You must cover yourself in a legal sense by incorporating. Find a legal entity that will best suit you, as well as minimize your risk. Leaving your personal assts and accumulated wealth at risk as a sole proprietor or DBA is just risk foolish.

Risk is everywhere, especially for the entrepreneur and small business owner. Knowing the risk you face, as well as having effective strategies in place for mitigating that risk, is critical to the future survival of your business.