Risk is the main reason why maximum entrepreneurs fail. Every successful entrepreneur has one quality in common, i.e., they can manage risk factors irrespective of how tough it is. There are many risks an entrepreneur can encounter from starting their start-ups to a successful company. Here are some common risks which you must know if you are thinking of becoming an entrepreneur.
1. Competitive Risk
Let me remind you, you are not new to the market. If you are designing a product maximum possibilities are there that product is already available in the market. Your business competitor will give you a tough challenge to prove your existence in the market. Start-up companies face this risk the most in front of well established big companies. To encounter this stiff competition your company should analyze the market and make proper strategies to encounter the stiff business competition. Knowing your rival company weakness and strength can help a lot to prove your existence in this competitive marketplace.
2. Technological Risk
The difference between an entrepreneur and a traditional businessman is that an entrepreneur thinks something new. Everyday technology is advancing. What may seem to be advanced today can be obsolete tomorrow. The technology which a company used earlier may be obsolete today. This will lower the efficiency in manufacturing process your rival company will be benefited. Small business faces this problem mostly because of the lack of money to install new technology.
A suggestion is that your business should always target the present as well the future market and then only you can survive in this stiff competition.
3. Economical and Financial Risk
Big companies face this challenge very much because this risk is not predicted. If there is an economic crisis or recession company may go to huge debt or losses. Good strategies while setting the company to encounter this challenge can help a lot to survive during the recession.
If the company doesn’t have a good strategy then the company will run out of money. A good strategy about how, when and where to invest is needed for every successful business.
4. Investor Risk
Every company needs investment to start and run. Getting investors is needed for running the company smoothly.
5. Political and Legal Risk
The political scenario and laws and regulation can change from time to time and place to place. Changing of political scenario and laws can affect the company’s growth. Big MNCs face these problems everyday as they have to run business in different nation and every nation has different law and political scenario. A proper strategy how to encounter legal and political issues must be done before starting every business.
6. Strategic Risk
Companies make well strategies before starting any business. But sometimes due to mismanagement and poor decisions lead to strategy failure. This can cause huge financial loss to the company as well as can face legal issues.
Every entrepreneur needs to study every angle, the pros and cons, of every strategy before finalising any decision.
7. Employee Risk
No company is successful without a good team. A good team consists of team leaders and team workers. Employees are the backbone of every company. Less seriousness, dishonesty, irresponsibility, laziness etc can cause a huge loss to the company.
A good salary, reducing the pressure from employees and taking care of employees can solve many problems.
8. Credibility Risk
Maximum time a company runs by its reputation. No matter how good is your product if your customers don’t trust you, your product is valueless. Small growing companies face this problem in front of big reputed companies.
The first and foremost important strategy of a company should be to gain your target customers trust.
9. Environmental Risk
The risks which occur due to environment are environmental risk. Environmental disasters like flood, earthquake etc are the main environmental risk which in most cases can’t be avoided because of its suddenness of taking place.
Risks are not permanent. Good strategies and a good team standing behind can encounter every risk.
“The biggest risk is not taking any risk… In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” – Mark Zuckerberg