The Risk of Starting a New Business

security-and-riskThere is always a risk involved when putting up a new business. Entrepreneurs planning on a new venture put a lot of thought into it. They look into their target market and the selling point that will make the venture compete with the rest.

Entrepreneurs and risk

Whether you are a manufacturer of galvanized steel coil, or a manufacturer of tin cans, reports say that not even half of established businesses from different industries feel safe. The rest always perceive danger that is in line with their business which could be inherent to the nature of business or a new danger that could be seen as a threat to expanding businesses.

Business failure

No business would like to fail. Statistics show however that over half of thousands of start up businesses fail in the first three years. One third will make a profit, and another one third will hit break even and the remaining can continue to lose money.

With this data, entrepreneurs put their new businesses into start with hopes that it survives its third year. They consider factors that make a business fail. The most common factor that makes a business fail is lack of customers, shortage of cash flow, and insufficient revenues.

Ensure Your Business Success

Several start up businesses do not succeed not because of a bad product or service. What cause their failure is the inability to handle risks involved in setting up a new business.

It is important to identify and then manage risks before it becomes a grown problem. Start growing your business with ease with proper risk management.

Identifying Business Risk – Risk Management Series

Three most common risks entrepreneurs will have to face:

  • Any business takes on financial risk. The stability of your cashflow can be highly affected by many factors. And thereby control of finances should be strictly managed in order to ensure success.
  • Legal matters. How many businesses closed due to legal matters? How many businesses are facing lawsuits? Any business should be prepared with possible legal proceedings that may arise. Be prepared for whatever lawsuit your company may face in the future. Know your business inside and out in order to defend it from malicious threats that will hinder the growth of your company.
  • Any business requires people to man the business. And hiring people means expense. Nonetheless, consider your people an investment. When you invest in the best sales team it can bring about better profit. Just as when you invest in the best advertising team, you build a better and stronger brand.

While the risk of running a business is normal for any entity, the successful businessmen learn to mitigate the risk with good planning. However, regardless of how good planning can get, businesses should be prepared of the worst.