Risks of Starting Your Own Business
Starting a new business is challenging yet it should not hinder you from venturing into new business. The risks of starting your own business are inevitable but there are ways on how to minimize the risks.
Thus, you can still have the opportunity to run the business that you dream.
Many entrepreneurs are attracted to start a new business because of the advantages it offers. Aside from being the boss of your own business you can have the privilege to work at your own time preference. However, despite of the good ideas you learned in running a business you cannot avoid the risks that would come across along the course of running the business. The risk is possible even for limited company or sole trader.
Common Risks
The primary risk of starting a new business is the fact of having no contacts. Apparently, established businesses depend on their contacts in the industry. However, this would not work with new businesses. This is because new business should prove first the reputation before they can obtain contacts. That is why obtaining contacts is also risky. Nevertheless, you can obtain contacts through recommendations from other established business owner in the industry or from suppliers. Another risk in starting new business is the time you need to provide for your business. Usually, the ideal running hours of many businesses are from 9am to 5pm. However, because you are the boss of your own business you cannot avoid to bring work at home thus would require another working hours. This risk poses significant impact that can affect personal relationship and family life.
On the other hand, it would also be risky to start a new business despite of being the boss. This is because you need to answer to your clients that are your bosses in order for your business to flourish. Without pleasing your customers you cannot ensure that your business will become successful. In like manner, you should also take into account the risk of financial loss. When starting new business definitely you will need startup capital that you will use for significant reasons in running the business and you cannot avoid financial loss. That is why you should see to it to break even so that you would evade loses. In this sense, you should ensure that the expenditures are of the same amount as your sales.
Finally, the major risk in starting a new business is the competition. Apparently, the idea of starting a new business is quite revolutionary and it does not guarantee that you alone have the idea of the business you intend to start. You should keep in mind that there are many reasons in which competition is risky. In this sense, make sure that you are aware of the prevailing competition in the industry you want to get into.
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