6 Types of Business Risks Every Entrepreneur Should Know About

Starting your own business has the potential to be one of the most lucrative endeavors that you can pursue. After all, there’s a reason why the United States has nearly 30 million entrepreneurs.

You’ll also need to factor in the type of business risks you’ll face while developing a plan for your company.

Not sure where to start? Don’t worry, we’ve got you covered!

Let’s take a look at everything you need to know.

1. Getting Paid Irregularly

Until you build up enough clientele to make consistent sales, you likely won’t be able to pay yourself as a normal job would.

This is especially true for the first few months while you get things up and running. If finances are particularly tight, you may even need to pick up a part-time job to pay the bills.

This is the business risk that’s most off-putting to potential entrepreneurs. But, there are few things more satisfying than being able to pay yourself a substantial salary after you’d established yourself in your industry.

2. Meeting Vital Deadlines

In order to take advantage of your business financing, you’ll likely have a large handful of deadlines and metrics to hit within the first couple of months after you start your company.

These include:

• Making a certain number of sales before a particular date
• Hitting milestones on product, service, or website development
• Establishing relationships with certain types of clients or a certain number of them

There are plenty of other time-sensitive tasks to worry about though. This period can become increasingly stressful if you have investors in your company who want to start seeing results.

3. Cybercrime

It’s estimated that the global cost of cybercrime in 2017 was approximately $600 billion. And, with new developments in malicious technology, this number is expected to rise over the next few years.

Small businesses are prime targets for hackers due to often not having the funds (or the time) to properly protect themselves. As you can expect, a company in its infancy that experiences a data breach will have a hard time recovering.

In addition to financial losses and a lapse in productivity, cybercrime also threatens to erode the trust your customers have in your company. If you’ve shown them that their personal information isn’t safe, they may never do business with you again.

4. Pouring Your Own Time into The Company

Unfortunately, your responsibilities as an owner don’t suddenly vanish at 5 PM. During the most intensive periods of getting your company off the ground, you may even find yourself working until close to midnight (or later) on some occasions.

You may also experience a notable strain in your social life and relationship with your family. Even if you try your best to prevent it, working for 60, 70, or 80+ hours each week will take its toll on your life eventually.

However, it’s important to remember that this phase won’t last forever and that the majority of other business owners go through the same thing. If you look at this time period as a necessary task and not a permanent lifestyle change, it will be far easier to overcome.

5. Keeping up With Your Competition

It can be intimidating to prospective entrepreneurs to enter an industry where their main competitors have been thriving for over a decade. And, it should, since you’ll need to work that much harder and smarter if you want to succeed.

But, regardless of how much time and effort you put in, there’s always the chance that your audience simply doesn’t choose to do business with your company. It’s not always personal, though, and is often decided by:

• Larger companies offering better value for the price (or lower prices in general)
• A better range of products and services
• Their time in the industry has made them a household name

It’s not impossible for small companies to disrupt an industry, though.

In fact, just take a look at what happened to Blockbuster after Netflix began growing. The multi-billion-dollar company eventually filed for bankruptcy as a direct result of not acknowledging Netflix as a serious competitor.

6. Maintaining Consistent Sales

In the beginning, you’ll experience a lot of highs and lows (in many different forms). One of these will likely be sales.

You’ll often have a week or so where you meet (or even exceed) your sales goals for your product or service. Then, you may encounter a period where you fall drastically short of the numbers you’re trying to meet.

This fluctuation in performance can easily lead to equally volatile emotions. It’s not uncommon to shift from feeling like everything is running smoothly to regretting your decision to start a company in a matter of days.

Consistent sales will happen over time if you have a thorough marketing strategy. Make sure to push the days and weeks where you aren’t getting as much business as you’d like.

Managing These Type of Business Risks Can Seem Difficult

With the above information about the type of business risks you’ll face in mind, you’ll be well on your way to ensuring that everything goes smoothly for your company in the future.

Don’t let the fear of striking out keep you from playing the game! In other words, take those necessary risks to grow.

Want to learn more business tips that can help you succeed? Be sure to check out the rest of our blog.