Without a doubt, opening a business offers possibilities and rewards for budding entrepreneurs. But, there are also common business risks. Some of those an entrepreneur can easily overlook. The opportunity to become your own boss is the primary reason cited by 26% of entrepreneurs surveyed. Making all of the rules and key decisions are other reasons entrepreneurs open a business. Assuming you will be able to make more money and set your own schedule show up in other entrepreneurial studies as well.
Business Risk Types
When wallowing in positive business opportunities, it is also important to understand there are also risks connected to business ownership. Small Business Coach Associates offer four major categories of business risks to be aware of:
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Financial Risks
This type of risk can temporarily or permanently threaten the fiscal health and profitability of a company. Economic downturns, inflation, bank loans all fit into this risk category.
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Operational Risks
These risks can slow down or stop a company’s ability to function temporarily or indefinitely. Natural disasters and strikes fall into this category.
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Compliance Risks
These risks involve complying with the laws and rules of the country where your business operates. Local, state and national laws or rules all apply in this area.
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Global Risks
Global risks come into play when a company will operate in foreign locations. Every country has its own rules and regulations. You are responsible regardless of where your home base is.
Business Risks Often Overlooked at Start-Up
There can be quite a few risks to consider as an entrepreneur dreaming of starting and building a successful business. A basic Google search for ‘business risks’ provides articles for 12, 20 or 65 risks, just on the first page of results. Mind-boggling, isn’t it?
To start you off at a more manageable level, let’s begin with this infographic from Performance Card Service. They only address six business risks often overlooked by entrepreneurs. Definitely more manageable.
6 Common Business Risks Often Overlooked
Summary
New business opportunities can be quite heartwarming. But, it is also important for those taking the leap to open a business be mindful of risks. Take the time to do your homework. Market research will help determine if there are customers who want what you offer. Develop customer personas of ideal customers you can market to. Never, ever pass on the business planning phase.
Whether you intend to seek financial assistance from a lender or not, the process itself is invaluable. Most small business failures come as a result of insufficient capital. When things go smoothly, things are great. When an unforeseen crisis – like a pandemic – comes along, financial security can fly out the window. Further, when the crisis comes along and changes payment options to ‘touchless’, things can get really dicey. Try to be prepared for anything and everything.
We spent a large amount of time during the past year working to get our website back up and running. For this reason, I ‘beg’ you to not overlook the risk of cybercrime and security to your firm. Protect your company. Be aware of business risks that can be easily overlooked. Plan for risk and prepare for times when something sneaks up on your company radar.
