Farzana Sumra, 38, co-founder of Naveah Capital Insurance Agency Ltd:
I am a finance and insurance consultant. I have been in the insurance industry for about 18 and it’s something I’m passionate about.
Risk management is all about preventing or mitigating risks that lead to financial losses in business.
When you start a business, there are always things that can prevent your business from flourishing. By managing these risks, your business can flourish.
These risks include lack of adequate funding, competition, government regulations, mismanagement often due to of lack of knowledge or relevant skill and recession.
Ideally you should hire a risk management consultant before starting a business, but that is not always possible especially when you are a first time entrepreneur with few resources. The best advice I can give to any new entrepreneur is to do ample research before starting out.
Don’t start a laptop business because you have seen your neighbour has started one and they are successful.
Don’t jump into any business without learning about the possible or potential risks that are specific to that line of business. This is because the risks that one may experience in a clothing business, may not be the same in a media or even insurance business.
Even in the clothing business, the risks one may face with an actual shop may be different from those that an online clothing entrepreneur will experience.
Further, risks are not always obvious, and so if you have a mentor in the same field, that is a plus as they can provide relevant information that will help with mitigating risks.
However, if you do not have a mentor, talk to people who are in the industry, but note that if they see you as a potential competitor, they may not be so willing to disclose relevant information. Also talk to your suppliers and ask them for insights into the field.
I believe that every entrepreneur should have a business savings fund for the future. You will find that’s some businesses spend all the profits they make, and there aren’t any savings.
Having a savings fund is particularly important for unpredictable risks like Covid-19. The businesses that had funds like these, when the pandemic hit, were able to cope with reduced revenue. It is also good for an entrepreneur to have diverse investments, and insurance.