By Eric Parker

In business and in life you are faced with the risk/reward alternatives i.e., the higher the risk the greater the reward! However, the more you minimise the risk the lower the reward.

In life we have choices – you could remain risk-averse but then your rewards will be limited.  On the other hand, we could take big uncalculated risks resulting in failure.  So, we are all faced with these big decisions both in our personal lives and in our business environment.

In your personal life, some of the big risk decisions would include what you study, who you marry, purchasing a house or car, saving for retirement etc. however we would rather concentrate on your business risk.  Here the big question is “should I start my own business, or should I continue to work for a boss?”

Starting your own business has its risks but if successful the rewards are huge both from a financial and personal achievement point of view.

So, let’s imagine you have started your own business these are the decisions that you need to make:

  • How can I improve my business?
  • How and when should I grow?
  • How should I market my business and how much should I invest in marketing?
  • How can I monitor and measure my business, especially in terms of cash flow?
  • How can I ensure my staff are well trained, well rewarded, and motivated?
  • What new products and/or services should I introduce?

The risk factors you will need to consider include:

  • The market and what you project for the local market and international markets.
  • The competition activity.
  • The product supply chain i.e. What is happening in China and the supply of goods to South Africa?
  • Do you have sufficient cash flow to fund your planned growth?
  • Debtors control and make sure your customers are creditworthy and pay timeously.

Who do you have available to help you?

  • Accountants – They are there to assist you to measure your business in financial terms, paying your taxes and statutory obligations on time and adhering to corporate governance principles.  They will do your financial audit and submit it to SARS.  The business accountant is in a good position to assist you with your business and personal tax.
  • Lawyers – They are there to interpret laws, rulings and regulations for individuals and businesses.  They are there to point out risks to you and protect/defend you if legal action is taken against the business or any of the business suppliers, providers, staff, etc. They can draft policies and agreements to protect your interests.
  • Business Consultants – individuals or companies that can mentor, consultant and guide your business to ensure growth and development or even to optimise the current business.

Note: Both accountants and lawyers tend to err on the negative side.  They will concentrate on the risk side of the business and not the rewards.  True entrepreneurs have considered the advice of the accountant and lawyer but override them with the view to the reward side with the help of a business development consultant.


You are in control of the risk/reward formula in life and business.  It’s your choice – you can have a risk-free life with little rewards or a good, well-calculated risk profile with meaningful rewards.

Contact us to find out how we can assist you with taking strategic risks that will benefit your business

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