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This article is written by Ankita Rathi who is pursuing a Diploma in Business laws for In-House counsels from LawSikho.


By default, most entrepreneurs are risk-takers. When they decide to start a company, many entrepreneurs risk all that they have. There’s no stable monthly income for entrepreneurs, and spending time with family can be a challenge. It has never been more exciting to start a company. The start-up economy is rich in potential, creativity and opportunity. But it is also rife with high-stakes threats at the same time. And while it might be daunting to take the leap of faith, once you understand and evaluate these dangers, diving into the deep end of the start-up pool is substantially less frightening.

Factors that entrepreneur needs to consider before starting a business:

  1. Capability related risks which the entrepreneur needs to assess that will he be able to provide goods and service at the required volume and under the timelines?
  2. Performance related risks which the entrepreneur needs to assess whether he will be able to provide better quality of goods or services which are already in the market.
  3. Fund related risks which the entrepreneur needs to access that will he be able to raise funds to meet the requirement of functioning the business smoothly? He needs to assess that by what ways can he get the funding to meet the budget requirements?
  4. Government regulations related risks which the entrepreneur needs to assess that the business shall work in accordance with the law of the land.
  5. Technology related risks which the entrepreneur needs to assess if there is enough technology used by the business and also that the business is safe from the cyber attacks. 
  6. Market related risks which the entrepreneur needs to assess that if there is product or service already in the market then what all efforts the other competitors are making to attract the attention of the customer and building brand value in the market.
  7. Operational related risks which the entrepreneur needs to assess how the daily operations of the business will work and the cost of the operations shall not be over the budgets. Operations of the business should be controlled according to the budget that the business has. 

Here are some of the risks and solutions that should be assessed and minimized by an entrepreneur or investor.


The demand for a good or service may be influenced by several factors. The ups and downs of the economy and new consumer patterns pose a challenge to new companies, and one year, but not the next, a certain product may be famous. For instance, people are less likely to purchase expensive goods or non-essentials if the economy slumps. The competitor could steal market share if a competitor releases a similar product at a lower price.

SOLUTION: Know why, how and where the customer gets attracted to the products or service, try to build goodwill of your business or the brand in the market to influence people. Always look for the marketing strategies used by the successful business and pricing of your competitors. 


It is tough enough to persuade your first client, but it is not easy to sustain a steady customer pipeline, even when your company is up and running.

When you are at the early stage of your business, it is often a very difficult task to get individuals to put their trust in you. To get a steady lead flow in your pipeline, you have to focus on creating a loyal group and a wide network of prospects.

SOLUTION: This is where techniques such as word-of-mouth marketing, consumer testimonials, etc. can be leveraged to. Also, if you see that anyone can help you get more leads in your network, then don’t hesitate to reach out. To get the word out, ask for referrals, suggestions, and everything else. To grow your client pipeline, you can also use Bing Ads.


The possibility that funds will not be available at the amount or timing appropriate for the success of the startup. This is the most serious risk that an aspiring entrepreneur must take into consideration before taking the final plunge. And you will have to work towards preserving your business in the first few months, or even years, instead of dreaming of a whopping or steady profits.

SOLUTION: It is a safe idea to keep the budget at least in reserve for those months. To keep your company afloat, make sure you have enough money in your accounts.


The risk of creating or using less than ideal technology or of a competitor leapfrogs the technology of the startup. Cyber security risks are one of the most common entrepreneurship risks, especially in today’s world.

If your confidential data leaks out everyone understands the dramatic impact it would have on your company. No one should be able to access essential and sensitive employee and company data without proper authority.

SOLUTION:   you need to look for possible cyber security threats to see what the things that can be covered are. The first step to solving an issue, after all is to recognize what needs to be solved. Make sure that you use a two-factor authentication device once you’re through with that. The two-factor authentication system requires that you enter a password along with a code that only you have access to. 


An entrepreneur should always be mindful of his rivals. If there are no rivals at all, this could mean that a product is not in demand. The market may be saturated if there are a few larger rivals, or the company may fail to compete. Additionally, by obtaining patents to defend themselves from rivals, entrepreneurs with new ideas and technologies can protect intellectual property.

SOLUTION: Only if you conduct a proper study of your sector will you emerge from such hazards. The possible disruptions that might influence you in the future should be discerned so that you are prepared for those obstacles when the time comes.


The credibility of a company is everything, and when a new business is introduced and consumers have preconceived ideas, this can be especially so. In the early stages, if a new company disappoints customers, it may never gain momentum. In company credibility and word-of-mouth marketing, social media plays an enormous role.

SOLUTION: Recognizing the effect that credibility can have on performance is significant. Investigate vulnerabilities within the company and assess related reputational qualities. Brainstorm future scenarios for workers at different levels that could harm public image, since they could have specific contributions.


There is no way that every risk can be resolved by one person. Therefore to help prepare for a task, it is crucial to have a great team and a personal sounding board—a mentor, confidante or even a start-up incubator. In order to develop a product, bring it to market and sustain good development, your team is also great for bouncing around ideas.

SOLUTION: You will have to place a huge amount of confidence in your team to get things up and running. Now when you don’t have many choices at this point of life, this risk is inevitable. Invest in individuals who believe in your product and instill a sense of faith that they can help get your business over the finish line.


Many entrepreneurs may become so mired in the specifics that they lose sight of the overall direction and strategy of the business entirely. Alternatively, certain business founders stay at a high level and ignore important information that lead to serious issues. 

SOLUTION: In the early stages, a dichotomous approach to evaluating the specifics while keeping a keen focus on overall business execution would ensure the highest likelihood of long-term success in building a business. 

Simple approaches can lead to the management of risks related to the business and build a reputation at the marketplace:

  1. Learn to manage the risks: This can be done efficiently and effectively by forecasting the upcoming risks and being prepared to face the consequences. 
  2. Looking for opportunity: Entrepreneurs also have the opportunity to recognize flaws in the market and find solutions to the issue. Pursuing a new opportunity is a potential challenge, but entrepreneurs have the opportunity to learn a lot from it if their solution is viable. 
  3. Reducing the financial risk: Reducing financial risk by managing your accounts receivable to minimize outstanding balances and identify poor credit risks early on in your business is the key to risk management.
  4. Role of insurance: By shielding them from lost liabilities, accidents and illnesses pass the risks to insurance companies. By insuring all sorts of raw materials and processes, in the event of a company or scheme failure, you have a chance to lose even less.


By establishing a perfect balance between the risks and rewards, the best way to avoid  these common entrepreneurship risks is to be prepared for the upcoming risks and in the business and working on its solutions. If you are not able to take any chances, don’t expect a high ROI (return on investment). Do not take a risk so high that you have bad instincts about it, especially if you do not have a reliable plan to fall on. This doesn’t mean you can always excel sometimes you may also have to run into hazards that might not pay off. But by learning from your failures, the best way to go about it is to be prepared for the worst scenario of taking the risks.






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