Risk is an essential part of running a business. It can make your dreams come true but it can also shatter it if you are not careful. A new study shows that successful entrepreneurs are more likely to take risks.

Some 60 per cent of those with assets of more than $1 million said a high appetite for risk had been a big influence in generating their wealth, compared with 36 per cent of those with less than $1 million of assets.

Given that risk is all around us, you should learn how to take calculate your chances of survival in this game. Here are some of the things you need to consider:

1. Look before you leap. Research about the risk you are about to take and consult with experts in the field to gather more information. The more you know the better your chances of survival.
2. Have a Backup Plan. Because there are different ways to solve a problem, you should have an alternative plan in case things will go out of hand.
3. Rank the risks. If you are taking several risks, you should prioritize which one to tackle first. A good measure is to consider the consequences of each scenario and the probability of it happening. However, this is a very tricky method because it’s difficult to avoid subjective opinions.

With many banks now catering to small businesses, finding the right bank can be very tedious for many entrepreneurs. On the brighter side, too many options mean we have higher chances of getting low-interest loans and build better business relationship.

In case your intention is to get a loan to improve your cash flow or finance your new ventures, here are some things you can do:

1. Check the websites of different banks in your area and compare their loan rates. The difference would probably be smaller because each bank is constantly monitoring the moves of competitors.
2. Talk with bank representatives to get more details and check if there are hidden costs. Make sure you do tip #1 to help you negotiate better.
3. Consult with your professional network to get their feedback and experience about the different banks in your area.

If you want to improve your business relationship with your bank, you should do the following:

1. You and your employees should be friendly with bank’s staff. Some network only with bank managers but this is a grave mistake. Establish relationship with enablers like tellers, customer service, loan officers, and guards for they can help in your daily transactions.
2. Give referrals. Refer other clients to the bank manager and don’t be shy to promote your efforts. Since they also have sales targets, they will greatly appreciate any prospects you point in their direction.
3. Don’t ask negative questions. Inquiring about bankruptcy or overdraft policies might create a wrong impression to bank officers about your capacity to pay.

Starting from scratch might be very daunting for some starting entrepreneurs. They might find it very difficult to build a customer base, develop new products, handle initial marketing campaign or hire reliable employees.

To sidestep these birth pains, one alternative is to buy an existing business and expand it to reap more profits. All systems are already in place and you might just need to tweak it to be more efficient. When buying a business, you should carefully consider the following:

1. Reasons for selling. If it is so good, why sell it? Don’t expect some owners to tell you the truth but you should find ways to validate the reasons provided. You can talk to some of the employees or other business partners.
2. Business image. Although having a negative business reputation gives you the power to bargain for a lower acquisition cost, it can hurt the future operations of your business. You should meet with several customers and suppliers to gauge the existing business image.
3. Financial statements and sales records. Get the financial statements for the last 5 years and hire an accountant to audit all the books for accuracy and consistency with tax returns. This will also give you a good estimate of business profitability and much how liabilities you have to assume.
4. Legal documents. Some of the important legal contracts include articles of incorporation, purchase agreements, sales contracts, employment contracts, copyrights, and trademarks. You should consult with legal experts to be more accurate.

Having trouble managing your startup capital? You might be spending more than your budget to carry on with your daily operations. If you’re in this situation, you should start using the age-old system called bartering.

In a nutshell, bartering is the exchange of goods or services without using any money. If you’re looking for a clever example of bartering system, just look at our special offer at the top of our site:

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In the end, it’s a win-win solution for both sides without incurring additional expenses. Interested bloggers will finally have their dream logos while we get free promotion for our excellent services. Here are some additional advantages of bartering:

1. Minimize Inventory. For companies selling seasonal products, they can barter their items during off seasons. This will help move excess or aging inventory quickly.
2. Conserve cash. Instead of spending your cash for new products or services, you can divert it to your daily operations or buy more important things like office furniture and fixture.
3. Get new customers. If the other party is delighted with your services, you can expect free word-of-mouth advertising that might lead to new customers or bigger projects.

Barter is just one of the ways to bootstrap your business.

Some starting entrepreneurs still use their personal credit cards to pay for business-related expenses. While this may be convenient during the early stages, it might do you more harm than good once your business expands. Perhaps it’s time for you to switch to a business credit card. Here are some of its advantages to your small business:

1. Easy monitoring. No need to go over every receipt just to separate your personal and business expenses at the end of each year. Many business credit cards provide itemized reports of your expenses for easy bookkeeping.
2. Establish your Business Credit. Regardless of what happens to your business, your personal credit score will not be affected if you use a business credit card. If you have a good business credit rating, it will also help you secure loans easily in case you want to expand your business.
3. More Perks. Many business credit card companies wooing small business owners offer numerous business-related rewards and discounts for office supplies, phone services, and business travel.

In case you’re having a tough time looking for the right business credit card for your company, Small Business Trends will guide you on how to choose a card while BusinessCreditCards.com presents a comprehensive comparison of different cards.

Finding a balance between aggressive selling and effective cash flow management is very important to sustain your business over the long haul. The reality, however, is that many entrepreneurs are more focused on achieving the top line or sales and very relaxed on collections of unpaid invoices. Aside from cash flow factoring, there are other ways to improve your cash flow and these are:

Set up Your Collection Policies

Even before starting your business operations, you should already have a strict policy on collections and your employees should fully understand this. It can be simple policy like a friendly call to remind your customers one week before the actual payment date. Having a working system helps track all your accounts and alert you of possible bad debts.

Negotiate for Longer Terms with Supplier

When dealing with customers, your negotiation stance is to get shorter payment terms, usually 30 days. However, do the exact opposite when meeting with your suppliers. Try bargaining for 45 to 60 days payment terms to give you enough time to collect your debts first.

Read 5 tips on how to quickly improve cash flow at CEO Consultant for some advice on cash flow.

A common way to fund a startup is to use your personal savings. Driven by passion and blinded by ambition, a common mistake made by many entrepreneurs is to go all in or use all of their personal savings to start a business.

It is alright to always make some conservative assumptions and take into consideration the possibility of business failure. Every business is a gamble – few winners and more losers. This perspective helps you control your personal savings and consider other options.

A good way to finance your startup is to use only 50% of your personal savings to support you in case the business folds up. For the balance, you can do the following:

• Work part time. During the startup stage, you can still find work during your free time to generate extra cash and network with other people. Once the business starts picking up then it is time to quit.
• Know your other options like 401k loans, using credit cards to defer payments, or low-interest loans from family and friends.
• Garage sale. It is time to clean out your closet, look for old personal belongings, and hold a garage sale. This may not amount to big money but it will certainly help add some cash in your pocket.

The important thing here is not to rely solely on your personal savings to jumpstart your business and to be more resourceful in finding alternatives.

There are different bootstrapping options available to raise capital for our startup ventures. One of the methods is the use of credit cards. Startup Journal reports that this approach has gained popularity among entrepreneurs.

Card spending by small businesses on tax payments and preparation alone jumped by 80% in the 12 months ended February 2007, according to a report by Visa USA, based on data about spending on Visa cards by 600 small businesses during that period.

Now you’re wondering if this method is a practical solution to your startup needs. The answer depends on your objective.

When used to temporarily fill your financial gap, the answer is YES. Since many credit cards are not designed for small businesses, using this method is very risky. So, it must be used sparingly and only as a temporary solution to your problems.

Entrepreneurs usually resort to credit cards after being turned down by banks or other traditional lending institutions. Once you recover from your cash flow problem, try asking your local banks again for loans and refrain from using your credit card this time.

One of the common ways to bootstrap your business is by using your personal savings. In case you do not have much bank savings and do not want to mortgage your properties, you may want to explore the possibility of using your 401(k) to finance your bankroll your operations.

This is an employer-sponsored retirement or savings plan in which income taxes are deferred until your withdrawal. However, many business experts and small business owners believe this is a rather risky alternative compared to others available. StartupNation could not help but emphasize the gravity of using your 401(k) for your business.

First, drain every other financial asset you own. Beg, plead and borrow from family and friends. Rack up credit-card debt to the stratosphere. Then and only then, if you’ve exhausted every creative business financing option available and you still need funds, consider the one way that you can access your 401(k) both legally and safely: borrow from it.

Unless you are already an established entrepreneur looking for additional resources to finance your business expansion, do not take this decision lightly for it has some serious impact on your future. After all, you spent years of hard work and made some personal sacrifices just to earn that money.

In addition to recent advice to bootstrappers, it is worthwhile to visit and gather insights from a classic post of Guy Kawasaki about the Art of Bootstrapping.

Focus on cash flow, not profitability. The theory is that profits are the key to survival. If you could pay the bills with theories, this would be fine. The reality is that you pay bills with cash, so focus on cash flow. If you know you are going to bootstrap, you should start a business with a small up-front capital requirement, short sales cycles, short payment terms, and recurring revenue. It means passing up the big sale that take twelve months to close, deliver, and collect. Cash is not only king, it’s queen and prince too for a bootstrapper.

Another good advice for entrepreneurs is focusing on your needs and setting aside your wants, initially. Some businessmen who started reaping profits from their ventures think they can spend right away. That is a classic business decision mistake for many inexperienced small business owners. Stick to your budget and limit your expenses on important matters. If you’re currently home-based, do not get a bigger office yet! Conserve your cash all the time.

Check out other blogs as BootStrapMe shares some bootstrapping tips, particularly about using early customers as fund sources. Also, Businessfund reveals 27 tips on how to bootstrap.