If you’re looking to strike out on your own and start a business, there are multiple risks that you need to be aware of so that you can mitigate them as best as possible. Understanding the risks and optimising your response to managing them are vital skills for entrepreneurs such as yourself to build up your knowledge.
Identifying how you and your business could be at risk can help prepare plans on how you can deal with them, should they occur.
It’s a critical aspect of business planning that you can also apply on a yearly basis, to address the potential risks and hazards that may occur that particular year while also reassessing your previously perceived risks.
The risks that you need to be most aware of are the risk of bankruptcy, financial risk, competitive risks, environmental risks, reputational risks, and political and economic risks. The constantly evolving changes to technology and the rapid digital redundancy from the constant changeovers in devices are other risks that your business may need to account for.
Financial Risk
Any new business should have a financial plan within the overall business plan showing income projections, how much cash will be required to break even, and the expected return for investors in the first five-year timeframe. Failure to accurately plan could mean that the entrepreneur risks bankruptcy, and investors get nothing.
Strategic Risk
By living in a dynamic and fast-paced world, business strategies can quickly become outdated and no longer be as practical or relevant when it comes to your business’s market. This can lead to struggles in reaching benchmarks for your business and key performance indicators (KPIs).
Technology Risk
To be competitive in a world where new technologies are constantly emerging, businesses like yours will need to adapt to these new systems and processes.
Competitive Risk
You need to be aware of your competition within your market. If the market is too saturated, it can be difficult for you to break through and compete on an even playing field. You will also need to ensure that your intellectual property is protected from your competitors by seeking patents to prevent them from stealing your products.
Reputational Risk
In the initial stages of your business, your reputation will be worth more to you than gold. If you fail to live up to customer expectations in the initial stages of launching your business, you may not gain the necessary traction that you need in the market. You can manage this with a strategy that communicates product information and builds relationships with consumers and other stakeholders.
Strategising for dealing with the outcomes of the risks that may eventuate for your business in your business’s plan is an effective way to show investors that you are accounting for any potential trip-ups. It’s also an effective means of evaluating your business’s performance as it progresses, as risk assessment is an ever-evolving process.
We can assist you in planning for any eventualities that you might encounter during your business’s start-up process, so speak with us.
