Why run a risk analysis on your freelance business?

Posted on: June 3rd, 2011

Guest writer, Deborah Henry-Pollard, explains the importance of undertaking a risk analysis so that you’re fully prepared, should problems hit your freelance business.

With a bit of practice, most of us can put together a plan for a project or a business.  However, if putting together a great plan in which everything works is all that’s needed for us to sail through life, then we would all be millionaires, household names or … add in your own indicator of success.

As a freelancer, with your future and your work life in your own hands, the real key to planning is not just the “in a perfect world” scenario, but the one in which you have also considered all the things which could go wrong.

For example, what do you do when:

  • you have a big presentation to a potential client and your child is sick and has to be off school
  • you are due to deliver a workshop and you start to lose your voice
  • you are writing a article for a newspaper against the clock and your laptop dies
  • your key client, who provides the bulk of your income, doesn’t renew your contract
  • your comfortable timeframe get truncated because you have to wait for other people to get their parts of the project back to you
  • you have two bad payers who owe you a lot of money and it is impacting on your cashflow

Some questions to ask yourself…

These are just a few of the many problems which could knock you off track.  For every aspect of your business planning, a risk analysis is vital.  At each stage, ask yourself the following questions:

  • What problem could occur?
  • What is the absolute worse case scenario?
  • How can I avoid this problem?
  • If I can’t avoid it, how could I minimise or manage this problem?

Come up with a contingency plan

It may sound depressing to think of all the things which might not work, but I can’t stress enough how important this process is.  By thinking of as many problems with as many viable solutions as possible, you can build a detailed contingency plan.  (I always try to come up with 12 solutions to each problem; the first ones are sensible, the middle ones are slightly desperate and the last couple are usually outrageously silly.

However, this breaks open your thinking and throws up all kinds of unexpected possibilities from which you can decide your two or three key solutions.)  Hopefully, you won’t need your contingency plan, but when any problems hit, you are fully prepared.

Practice makes perfect

A good risk analysis will help you to see most problems as an inconvenience rather than a disaster.  As you practise the habit, it will become easier, so that when the one thing you had not anticipated happens, you can face it with confidence.

Deborah Henry-Pollard catches fireworks.  As a coach, mentor and project manager, she works with individuals and groups in the creative sector to help them move their visions into reality.  Her website is www.catchingfireworks.co.uk, where you can read her blog, sign up for monthly newsletters and download her free ebook.

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