Key Risk Factors To Consider For Aspiring Entrepreneurs

Aspiring entrepreneurs are the thinkers, innovators and shapeshifters of the economy. Without them, we would get stuck in our ways, and miss out on so many of the products and services we take for granted.

It’s tempting to get carried away with grand plans and ideas as an inspiring entrepreneur with a budding business plan, but what about the key risks associated with professionals trying to make their mark in the business world and beyond? 

In this article, we’re delving into the hiccups and pitfalls you should be aware of when beginning your entrepreneurial endeavour, as we explore the key risks to consider.

Safety In The Workplace

Safety in the workplace should always be your first priority. Not only is it your ethical and legal responsibility to protect yourself and your employees from physical hazards or dangers to health and safety, it’s also important to think about protecting your business from insurance claims made regarding any accidental injuries that do take place.

First off, you must do everything within your power to create a safe working environment. Make yourself aware of the key workplace safety hazards. This might involve more preventative measures if you’re in a manual labour sector, for example through the provision of steel-cap boots, helmets or high-vis clothing. Next, you should secure robust insurance for your business to cover the property and contents itself, as well as your professional reputation and public liability.

Securing Adequate & Consistent Funding

Running a company is incredibly expensive. The operational cost of a start-up includes not only setting it up – but maintaining the funds to keep it running, especially in the first year or two where profits may be smaller and not completely cover your ongoing expenses and overheads, such as rent or raw material purchases. 

Don’t wait until your funds are running low to seek external help. Put in the months of planning to secure investment, funding, bursaries, government support and any other financial aid for your start-up. Continue looking for investors and funding opportunities as you navigate the first year or two. And don’t forget to apply to our Workast For Startups program to see if you could get $500 of Workast credit to help optimise your productivity and workflow.

Attempts To Scale Company Too Fast

Once you’re off the ground, it can be tempting to get caught up in the momentum and make plans to scale your company. This is a trap that many entrepreneurs fall into. It’s very risky to upgrade your inventory, expand your venue or hire more staff just because you have the capital to do so. If an unexpected natural disaster strikes, your industry experiences a drop in demand or spending, or the wider economy suffers financial strain, you’ll be left in a precarious position.

Instead, be savvy with your profit spending. Keep enough to cover your running costs for at least three months. In the meantime, elevate your business from the inside out, by upskilling your staff, conducting market research and mastering your digital marketing strategy and brand awareness. When the next opportunity to scale comes around, you’ll be in a much stronger and more confident position to go ahead with the leap.

Lack Of Exposure

You might have a foolproof business plan, but if customers don’t walk through your literal or metaphorical door, you won’t close the deals that will earn you the profits you need to turn your entrepreneurial idea into a booming business. It’s all too easy to narrow your target audience down too much or to rely on word-of-mouth or repeat business.

You should always be looking for new avenues to target your demographic, and give ample time and investment to your marketing strategies. You might need to experiment with different methods such as SEO, content and social media marketing. The most important thing is to get your brand out there – and to make sure it’s a brand that resonates with the needs and values of the customers you’re trying to attract.

Market Saturation & Competition

Depending on the industry, you may find there is already a wealth of competition wherever you look. For example, if you’re planning to open a coffee shop, boutique clothing store or interior design warehouse, it’s no secret that hundreds already exist, perhaps even within your community. Consumers have to make a purchasing decision between you and all the other competition.

It’s vital to do your research to identify what gaps exist in the market you’re planning to enter. Your USP (a unique selling point) will come in handy here. Be clear on what singular feature makes your business stand out so that you can use it as your focal marketing point. That way, you’ll reduce the competition – by offering something new within an existing market.

Ignoring Cybersecurity

The hackers won’t target me, they’ll go for a much bigger, more established business! That’s what you might be thinking, but in fact, it’s the complete opposite. Cybercriminals know that budding entrepreneurs tend to ignore the importance of cybersecurity, which is why small businesses are the targets of so many attacks, since their weaknesses are easier to exploit. If your company is the victim of data theft or corruption, you’ll risk losing profit and trade secrets and being sued by your customers for failing to protect sensitive information.

To protect yourself from the very real threat of cybercrime, install advanced cybersecurity measures designed for businesses, such as firewalls, two-factor authentication and encryption. Change important passwords regularly, update systems every few months, and teach cybersecurity in the workplace. It’s also a good idea to get cybersecurity insurance just in case you miss out on something, which will make it easier to pay for the damage associated with returning or replacing stolen data, software or technological hardware.

Aspiring Entrepreneurs: Are You Ready For The Risks?

In this blog, we’ve described 6 of the common risks aspiring entrepreneurs face when building a business, so that you know what you’re up against and can be better prepared. Here they are in summary:

1. Safety hazards in the workplace

2. Lack of steady funding

3. Scaling the company too early

4. Lack of exposure to potential customers

5. Saturated market with too much competition

6. Cybercrime and theft of data

Now you know what these risks are, as well as how to overcome them, you’ll be in a more solid position to consolidate your entrepreneurial plans and succeed in achieving them.