EnTrends

Once the business is up and running, it
becomes an art to keep the employees
and that's where a well-defined risk
management plan with regard to
motivation should be put into effect.

Debra Woog McGinty, director of
People Strategy at Cambridge Incubator,
has found that one of the biggest
challenges at a start-up is getting all the
members aligned to one vision. When
morale is low, a lot of listening and a lot
of expressing the strategy and the
reasons why the company is working
toward those goals is helpful.
Additionally, celebrating success of the
past and the ones that the company is
shooting for, boosts morale.

Taking Calculated Risks

Trust in Business couldn't service their
newly acquired customers without office
furniture, yet they didn't have any capital
to purchase it; a classic catch-22. They
approached a local office furniture
company, Leonhard Bürogestaltung
GmbH Furniture and told the owner of
their dilemma, making it perfectly clear
that they didn't know if and when they
could pay for the furniture and
equipment. Stranger things have
happened, but Thomas Bromberger, CEO
of the company, had a good feeling
about the two motivated women and after
reviewing their potential client list, he
decided to take the chance.

He sold them the office equipment on
credit without a specific deadline for
paying him back. The calculated risk was
necessary in order to do business. They
were in fact able to pay Leonhard
Bürogestaltung GmbH back.
Bromberger's risk, which he says he
based on his business instincts, paid off
for him as well. He is now one of the
company's most valuable customer
references.

Formal v Informal Risk Management

Few start-ups budget the money for an
outsourced risk management expert let
alone a formal risk management
department. However, just about all
established companies of any substance
have a formal risk management
department. The logic behind these

departments, according to the Carnegie
Mellon Institute, is that without them,
management will not have insight into
what could go wrong, consequently more
resources will be spent correcting
problems that could have been avoided
sooner, catastrophic problems (surprises)
may occur without warning (and with no
recovery possible), decisions will be
made without complete information or
adequate knowledge of future
consequences, the overall probability of
successful completion of program is
reduced, and your program will always be
in a crisis.

An early "risk manager" once said…"An
ounce of prevention, is worth a pound of
cure." This statement by Ben Franklin
was actually fire-fighting advice. Fires
were very dangerous threat to
Philadelphians, so Franklin set about
trying to remedy the situation. In 1736, he
organized Philadelphia's Union Fire
Company, the first in the city.

Start-ups without the financial resources
for formalized risk management can still
informally identify and analyze their risks
on a regular basis for relative importance.

According to Jarrod Bassman, manager
with Arthur Andersen LLP, a company
asking itself the following vitally
important questions will help in setting
an appropriate risk management strategy:

"What are the company's objectives?
How does it define risk? How does the
company feel about risk?" It's wise for a
start-up to make all levels of employees
aware of the risk management challenges
and involve them in the identification of
the risks.

Once a start-up has identified the
potential risks, the next step would be to
examine each risk and cross train
employees to handle them, so that the
company does not have to concern itself
with the potential risk each time someone
leaves the company or is absent due to
vacation or illness. Although it may seem
mundane to the staff, they should learn
what to do if, for example, the email server
goes down or if the copy machine doesn't
work. If there is no technical staff at the
company

who can deal with the identified risks,
the employees should know who to call
if such an emergency occurs. It is helpful
to create a directory of all of the
company's equipment, and the service
sources.

The entrepreneurs themselves may not
be able to identify certain risks that, say,
their accounting staff or secretarial staff
might be able to. All employees bring
their own personal experiences with
them to the workplace and the pooling of
knowledge can be invaluable to the new
company. An open dialogue that runs
throughout all levels of a new start-up
will have the added benefit of keeping
the morale high, since all employees will
have the well-justified feeling that their
opinions count and that their input is
influencing the policies and direction of
the company. Additionally, it will result
in piercing any veil of mystery that may
be shrouding the employees' view of the
actual state of the company.

Stacey van Hooven is an American
attorney living in Munich. She works in
cooperation with Trust in Business,
www.trustib.com, a full service company
for the start-up phase of international
subsidiaries in Germany. She is a
consultant on American- related
business and legal issues.

For further information, please contact
Stacey van Hooven at
Stacey@Trustib.com