Risks Involved in Entrepreneurship

Entrepreneurship comes with its own share of rewards. However, before rewards, follows risks. Undoubtedly, entrepreneurship is a game of risks. It is actually the risks involved which in turn, lead to potential rewards of freedom of fulfillment:

Strategic Risk:

With the changing needs and demands of customers, business needs to keep evolving constantly and entrepreneurs should come up with strategies with new vision every now and then. Some strategies may work out, some may not. Every strategic move comes with a possibility of failure. A failed strategy can be a huge risk to the business. A well-planned strategy can help reduce strategic risk.

Financial Risk:

Starting a business starts with debts and loans, looking for investors, capital investment etc. Even a well-established business needs to manage cash flows, salaries of employees, investment in marketing strategies and hiring new employees from time to time. A good financial plan can help in reducing the financial risk.

Reputation Risk

The best customers for any business are the loyal customers. The brand value is crucial for any business to thrive. One of the important factors for business growth is the trust of customers. One wrong decision can shatter the trust of customers and lead to the downfall of the business. Well-planned decisions can help reduce reputation risks.

Market Risk:

Market Research before launching any product or offering services is essential. The product or service should cater to the needs of the industry or consumers. If the right audience is not targeted, business can fail miserably. Similarly, any market is full of competitors. Anytime, a new competitor can show up with a better version of the product or better services at cheaper prices. A competitive risk analysis can help reduce the risk of competitors.

Growth Risk:

The approach to business growth also involves risk. Entrepreneurs need to plan well in advance if the business should focus on organic growth or inorganic growth. Whether strategies should target long-term growth or if some aspect of growth is required on a short-term basis needs to be decided. A good business plan can help reduce growth risk.

Operational Risk

Once a business is operational, it can involve different types of risks like unethical or illegal actions by employees or technological risks like data breaches and security concerns. A well-defined process and well-trained staff can help reduce operational risks.

There is no guarantee that a newly established business will work and that a well-established business will keep growing. Entrepreneurship is all about taking risks and also about adapting to the changes to avail the wonderful rewards of entrepreneurship.