Risks are part of the business.
In fact, the decision to become an entrepreneur is a risk by itself. As the old saying goes, nothing great comes easy. There is a strong link between risks and rewards.
In fact, before you gain authority in the market and achieve business gains, you will need to take on certain risks.
Let us share common business risks that every entrepreneur should be ready to handle.
Operational risks
If you cannot track your day to day operations, then you can forget about growth. Operational risks can be defined as risks resulting from inadequate or failed internal processes, people and systems or from external events.
These include failed IT systems, poor records management, or disorganized supply chain. Operations costs eat heavily on the business and can result in dire consequences.
Here are ways to mitigate operational risks.
- Effectively segregate tasks and duties
- Reduce complexity in different business processes
- Create strong organizational ethics
- Have the right people doing the right job
- Conduct periodic assessments, monitoring, and evaluation.
Economic risks
Economic risk is defined as macro-economic circumstances that may result in a massive loss of business. These conditions include inflation, market recessions, exchange rates, government regulations, etc.
As an entrepreneur, you should be prepared for changes in the market cycle, including periods of high prosperity and recession. You must understand that most of these economic changes cannot be predicted, hence the need to take them into account from the onset.
Always remember to save as much money as possible to maintain steady cash flow.
Cybersecurity risks
In today’s digitized world, every entrepreneur needs to be aware of cybersecurity risks. For example, many entrepreneurs have adopted the BYOD policy to cut costs on equipment. While such a system is effective and offers employees freedom, you will need to stay on top of matters of cyber threats.
For instance, you will need to have a mobile device management tool to gain visibility into the devices.
However, before investing in one, you will need to look at the mobile device management features overview first to pick the right one for your business. Understand how it works; look at the security compliance, limitations, etc.
Remember, MDMT should offer ease of remote management, network security, controlled device updates, and reduced administration costs.
Other than this, it would help if you also educated your staff on cybersecurity, among other measures to avoid costly breaches.
Product risks
Product fails, and risks happen. Sometimes your most fabulous idea as an entrepreneur may never make it to the shelves or the market. To avoid or mitigate this type of risk, it is advisable to use a human-centered design approach before developing a product.
This is a great way of understanding people’s needs and creating a solution for them.
Competition risk
Unless you are a monopoly, almost every business face competition from other businesses.
Instead of looking at it as a negative thing, think of it as an opportunity to be creative and innovative.
To stay ahead of the curve, you will need to learn some few tips;
- Know your customers
- Show the world what makes you unique, i.e., price, products, etc.
- Clarify your message
- Take care of your existing customers
- Target new markets
- Explore partnerships etc.
Employee risks
As an entrepreneur, you understand that your products are as good as your team. It is vital to take care of your employees for them to take care of your customers. Listening and taking care of your teams helps take care of other risks like competition, financial cybersecurity, etc.
For instance, did you know that employee turnover can cost you a lot in business?
These risks can be avoided by listening to and supporting your staff.
Remember, your employees are looking for trust, professional development, and collaborations. Create a work culture that promotes job autonomy, creativity, and productivity.
Legal risks
Business is not always rosy. There are times you will find yourself in a legal dispute after clashing with investors, customers, or competitors, etc. Other times there are chances that new policies and regulations will disrupt your business.
As an entrepreneur, you need to be aware of legal risks and the impact it bears on your business. It is good to have a lawyer on your team on advice and handle all legal issues.
Wrap up
It is virtually impossible to eliminate all business risks, given some are unpredictable. Luckily risks can be mitigated with proper risk management planning. Being aware of these risks and planning for them is a smart move that any entrepreneur ought to take.
Ideally, a good plan will save you tons of money and keep you growing in business!
