Five ways of minimizing risk by investors

Therefore, it becomes an owner's responsibility to reduce the risk in order to be attractive to the lenders.

October 04, 2014 10:26 IST | India Infoline News Service
Each business needs to fund its operations and need to seek money from financial institutions like banks and venture capital companies. However, its not an easy task to solicit funds from these institutions as your company need to fulfill the risk coverage adequacy from point of view of these firms. Therefore, it becomes an owner's responsibility to reduce the risk in order to be attractive to the lenders. Here are the five risk mitigation techniques that would help an organization to come in the radar of a financial institution's choice for lending.
Appoint Board of Advisors: Having a set of people ranging from industry experts to professionals will help add confidence into your organization. Having a board of advisors indicated that industry veterans have trust in your business model, which echoes well to the outside world. The board of advisors could be compensated through stock options.
Rope in Beta Consumers: It will be a well thought step if your business could find some support from beta customers, who could test your product and service and can give insights on what they liked or not. This invaluable information could be converted into sound actions before you hit the shelves and thus, boosting chances of success.
Collaboration: Making partnerships transmit a message to the world that people inside and outside industry believe in your business. Moreover, making collaborative deals help position one's business into a successful route.
Media Publicity: Amassing publicity from the media could help enormously build your public image and could set you right for seeking a capital raise. Generally, media coverage is associated with a positive impression of a business and thus, should be leveraged on.
Garnering Revenues: Lastly, increasing revenues is a good indication that your product or service has a substantial market, which alone should be enough to convince about the prospects of your company to the investors and lenders.

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