Every entrepreneur takes risks when starting out. Most entrepreneurs do not initially make it big. Most of the time, they dedicate many hours before becoming successful, often experiencing many failures along the way. It is important that potential entrepreneurs recognize the risks and learn ways to avoid them. Careful planning can often mitigate many of the risks of starting a business.
Living Without a Steady Paycheck
For most beginning entrepreneurs, living without a steady paycheck is one of the most difficult parts of being self-employed. Most employed people go into work every day knowing that they will get a steady paycheck at the end of the week or every two weeks. The amount is nearly the same, and it always comes the same day. Entrepreneurs don’t have that luxury.
Although it is sometimes possible to carry on a side gig while starting out in business, most of the time, your attention has to be focused on growing your business. Maintaining a steady side job makes it difficult to run a business. It is usually all or nothing with entrepreneurship. You’re either all in or all out. One of the ways to lessen this risk is to create a budget and stick to it. Self-employed individuals are often paid in spurts. It is important to save any excess cash during spurts of high returns so that you have funds to tithe you over when you have no income coming in.
No Sick Leave
Entrepreneurship takes a toll most people. It is stressful. You’ll likely lose sleep as you spend countless hours working on making your company a success. Not getting enough sleep and being under a lot of stress often affects the immune system making you much more susceptible to colds and illnesses. There is no paid sick leave when you are an entrepreneur. Ditto for paid vacation leave and paid Personal Days. Becoming seriously ill, being unable to work, and losing income is a serious risk that every entrepreneur faces. This risk can be mitigated by staying as healthy as possible. It is important to be proactive, and take care of yourself. Simple getting regular checkups can go a long way towards reducing the likelihood of getting really ill. In the event that you do become ill, it helps if you have an emergency fund already saved up to tithe you over. This is a must for any self-employed individual.
Entrepreneurship Might Change Your Personal or Family Life
Being an entrepreneur requires a huge time commitment. You may need to sacrifice time with friends and family in order to meet an important deadline. You might need to travel to meet the demands of client work. You will likely have to occasionally work long hours. These stressors could possibly lead to changes in relationships or friends becoming more distant. This is a definite risk of starting a business. Communicating with family and friends is the key to reducing the chance of them becoming resentful of the amount of time that you spend on business. Letting them know what is going on, why you are dedicating this time to business can be helpful.
Overestimating the Demand for Your Product
Demand is a key part of any new business. Without demand, your business will not be profitable. Regardless of the amount of research that you do, it is impossible to completely pinpoint the demand for a business with accuracy. Even if your initial estimations are correct, this could change at any time.
Not Having a Clear Business Strategy
In order for any business to be successful, there must be a clear business strategy. Not having a clear strategy can cause a new business to not take off, or ruin an existing one. Most of the time, the rewards of entrepreneurship compensate for the risks. There is nothing like being your own boss, deciding what schedule you want to work, and taking a vacation when you want to. But, you must be prepared to take on some risks to live this type of lifestyle. You cannot avoid all of the risks that you will face as an entrepreneur. But, that does not mean that you should not take a risk so that you can have a better career, life, and be happier. Rather, recognizing the risks will help you prepare for and overcome them so that you can build a successful business.