Starting Up is a Big Financial Risk
Financial risk, of course, is the big one.
Most businesses require investing some of your money – and often other people’s.
Careful planning, building up a cash reserve and budgeting well can reduce the risk, but they can’t eliminate it.
What are the risks of starting a small business?
Following is a list of fourteen startup risks the founders should consider as they endeavor on their entrepreneurial journey:
- Capability Risk.
- Design Risk.
- Development Risk.
- Economic Risk.
- Economic Life Risk.
- Funding Risk.
- Legislative and Policy Risk.
- Maintenance Risk.
What are the risks of having a business?
Here are seven types of business risk you may want to address in your company.
- Economic Risk. The economy is constantly changing as the markets fluctuate.
- Compliance Risk.
- Security and Fraud Risk.
- Financial Risk.
- Reputation Risk.
- Operational Risk.
- Competition (or Comfort) Risk.
Why do new businesses face many risks?
Entrepreneurs face multiple risks such as bankruptcy, financial risk, competitive risks, environmental risks, reputational risks, and political and economic risks. Entrepreneurs must plan wisely in terms of budgeting and show investors that they are considering risks by creating a realistic business plan.
What risk factors did you consider when researching your own business?
Here is my own priority list of key risk drivers that every entrepreneur and every investor should evaluate and minimize in starting a business:
- Team experience and depth risk.
- Market and opportunity risk.
- Competitive risk.
- Financial risk.
- Market entry strategy risk.
- Political and economic risk.
- Technology risk.