4 Risks of Starting a Business

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The risks of starting a business are usually what makes entrepreneurs apprehensive. There’s a lot at stake: money coming from your pockets, mental health, your career, etc. You will also be taking the burden of making all the decisions and facing the ups and downs of the business on your own.

Yes, it’s not easy, but if the business succeeds, the return of this investment will be extremely worth the hard work and the sleepless nights. When you’re thinking of starting a business, here are the things that you should take note of:


Before starting a business, pay attention to how much you need and the sources of your funding. If the money is coming from your savings, it’s usually a lot less hassle than taking it from external sources such as government funding, crowdfunding, or loans.

Because a considerable amount of money is involved in starting a business, it’s imperative to have a well-thought business plan to ensure the growth of the company when taking the next steps.

Unsteady cash flow

Being your own boss means the absence of a paycheck. There’s no more guaranteed, fixed amount to be received every month, and your budget must rely solely on the cash flow of your business. While businesses are profitable, your daily expenses may not fit into the regular cash flow as well.

To address this problem, entrepreneurs should have a buffer fund to fall into when the cash is short.

Hiring employees

When you’re starting, and you’re putting your business in the hands of a stranger, it’s hard to cultivate trust. It takes months and months of supervision before you can thoroughly teach them how to work around the business. You should also be monitoring them to get to know them to assess if they are trustworthy.

Trusting an employee is necessary because, at one point, you will need a right hand who knows the ins and outs of how to run things at the workplace daily. However, when an employee is lost, you should also have business continuity to save yourself from extreme repercussions, which is why before starting a business, a consultancy is necessary.

Market risks

Cafe owners looking at the laptop

Part of owning the business is estimating how much the market needs your products and how much they are likely to patronize it. In addition to this, you should know your demographic as different groups of people have different preferences when it comes to businesses.

For example, millennials are more inclined to support small, local businesses and consume products that are sustainable and have a higher purpose. If this is your demographic, you should cater to these preferences by–for instance–being more eco-friendly and using local brands in your business.

A business is a huge commitment that an entrepreneur makes. It’s like their child. They need to nurture it and create plans for its future for it to succeed and see better days ahead. Hence, knowing the risks of starting a business will help entrepreneurs know what to do and what to avoid.

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