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Risks Every Entrepreneur Should Be Aware Of

Risks Every Entrepreneur Should Be Aware Of

Are you dreaming of being an entrepreneur?

Be prepared for the risks and challenges accompany with it.

Probably, many of you heard that being an entrepreneur is a risky business. But every entrepreneur is not ready to take the risk as it conveys the negative meaning to them. The fact is that the journey of a successful entrepreneur can never short of speed breaking risks. In the business world, risk has a positive meaning. The more risk you taking, the more perks you have.

Just like the way everything has a good or bad side, in the same way, risk having good or bad sides too. For a substantial reward in the business world, substantial risk has to venture.

To establish your business, the entrepreneur has to put his career, personal savings and even personal time at stake. But some risks are optional because every business is not same or every entrepreneur is not after the same goal . Taking the path to becoming a successful entrepreneur makes all the difference. Building something on your own from scratch to a successful running business is worth taking the risk of entrepreneurship.

It is important for the entrepreneur to recognise and evaluate the risks to avoid them to some extent. Below mention is some risk factors every entrepreneur faces from ideation to ongoing development:

Financial Risk
⦁ Abandoning your fixed salary- Losing your steady pay job is the prominent risk that every entrepreneur has to face. In the initial year of your business, you may not even earn an assured steady income. You can reconcile your job with your business for a while but it may not b for a long.
⦁ Draining personal savings- Say good bye to your personal savings! Investing a good equity in business may be the first step in your own grave. For most of the start-ups making a choice is a risky plunge. Usually, entrepreneurs start with the external financial sources, but they have to sacrifice personal finance in order to set the things at pace.
⦁ Relying on cash flow- In order to run a business entrepreneur need to have good financial sense. An unexpected money flow would become a matter of concern and cause problems. By managing a regular cash flow to ensure enough working capital and predict the demand and supply, financial decisions which can be taken properly.

Employee Risk
⦁ Trusting your key employee- You not only need the skilled staff but also the reasonable and accountable team. In the initial stage of business, you only have a small group of people who are working together to get business run. You can't deny that relying on these employees is a risk taking factor, but you just can't run away; you have to put an overwhelming amount of trust in them.
⦁ Team experience and depth risk- As risk is the part of the business, you cannot completely remove it. But you can minimise the damage by taking the appropriate measures. Human resource is an important factor for the success of the business. An entrepreneur can build a team with both experience and knowledge.

Market Risk
⦁ Risk of market expectation- You cannot fulfill everyone's expectation at a time. With immense competition, it's almost impossible to satisfy one and all. In the business world nothing perfect is exist. Just have believe in your idea and aiming towards the betterment of the business.
⦁ Investing in expensive advertising- For the greater publicity, one should invest in the advertising even if on a tight budget. You cannot avoid it. But you can minimise the risk factor of expensive advertising without the traditional way of advertising. You can have a greater outreach with low cost by advertising with a social media platform.

(Also read: 4 Things You Should Know Before Working With An Entrepreneur )

Strategy Risk
⦁ Betting on the crucial idea- It's more like gambling on one single idea. You will be lucky if it hit. It doesn't matter how good your idea is, there is always a possibility to flop. Invest everything into a single idea is a big risk to take. But it is necessary to build a successful business from the scratch.
⦁ Risk of market entry strategy- A planned method of distributing the goods or services to the new targeted market incurred the risk. Various factors like distribution strategy, pricing or marketing are responsible for the failure of the market entry.
⦁ Unclear business strategy- Business strategy is something which can boom the business or collapse. A poor business strategy will touch down your new business or ruin an existing one. A clear business strategy can build a successful business. You cannot avoid all the risk, but a better business strategy compensates for the risks.

Other Risks
⦁ Donating personal health and time- Being an entrepreneur, you will face the risks. There is no way to avoid the risks. To make your business successful you need to spend countless hours in doing work. When you are building your business there is no balance between your work life and personal life.
⦁ Risk of competition- Every business have to face the higher degree of competition in the market, specially the new businesses because they face the stiff competition from established businesses.
⦁ Estimating popular interest- Customers are unpredictable! You cannot estimate with perfect accuracy. Market research or tests, whatever you did, you cannot calculate the demand accurately. This could be a giant hole in your business plans.

( About the author : This article is contributed by Kapila Tanwar, a writer associated with QuickCompany )

( Image Credit : Thinkstock)

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