There are many benefits and opportunities for starting a business. It can be an exciting move when the economy is booming, and you have the motivation sparked by a great idea.
You’re certainly not unaware of the risks and sacrifice that accompany every startup, but neither are you unwilling to tackle that journey. You don’t want to walk into a major business opportunity without recognizing all the risks associated with it, however.
Here are some key perils to anticipate.
1. Financial Uncertainty.
Your business has the potential to bring solid financial returns, but it can also lead to financial hardships. Most business owners don’t see wealth immediately. It’s a long process with losses and low points you’ll have to handle.
First, you’ll give up the steady paycheck. No more will you know exactly how much you’ll bring home every two weeks.
In many cases, you may not show any positive revenue for months, possibly even years. Many entrepreneurs go many months without depositing a paycheck, but they assume it will be worth it for the future payoff.
A significant amount of personal capital will also be required to launch a business. Not only does it involve personal investment, but you may also have to support yourself on your savings. Many entrepreneurs struggle to take off if they don’t have significant personal savings at the outset.
Finally, there’s the matter of cash flow. Cash flow problems are a leading reason startups fail. They’re unable to maintain positive revenue, and without money, there’s no growth.
These financial risks make opening a practice challenging, certainly in the beginning.
2. Legal Risks.
At any point, someone could slip and fall on your property and you would face a serious personal injury claim. There are also the risks of worker injury, committing a business error, performing unintentional fraud on your tax returns, and so much more.
You’ll need insurance and attorneys to meet these legal risks, and this is an expense that many startups may be tempted to forgo in the interest of putting their capital to other uses. For the sake of your firm’s ultimate success, however, don’t take risks with these business legalities.
3. Unreliable Team Members.
Whether your business partner isn’t pulling his weight, or your workers aren’t showing up, there’s a good chance you’ll experience the woes of unreliable team members. Other people aren’t necessarily going to be as invested in the success of your business as you are, and it can be a battle to find and keep good help.
4. Working Overtime.
Never underestimate the massive time commitment required for getting a business underway. You might be excited to leave the steady 9:00 a.m. to 5:00 p.m. grind, but that doesn’t mean you’ll get to work fewer hours.
Entrepreneurs often spend extra hours fostering a successful company, and many hours will have to be donated because the outfit is not yet sufficiently profitable to produce a paycheck. You’ll likely lose sleep, damage relationships, and suffer high levels of stress.
Given such stressful conditions, it’s all but impossible to maintain a healthy emotional life. You may discover the toll of working long hours is more costly than you could have imagined.
5. Health Risks.
Because of the time commitment and personal sacrifices, busy entrepreneurs often face higher health risks than they did when they worked for someone else. Along with mental costs like anxiety and depression, they can develop physical illnesses like diabetes, high blood pressure, and cardiovascular disease, thanks to the longs hours of sitting and high-stress conditions.
6. Unstable Market.
You might have a great idea and a strong business plan, but if the market isn’t ready to receive them, there’s little you can manage to achieve success. Most businesses fail because there’s not a current market need for the product, and the concept doesn’t survive.
The market might also be unstable, so the need for your product could be good, but the economy doesn’t allow people the wherewithal to purchase it. In such cases, you can do little wait for the market to improve before you can build a successful business.
7. Poor Business Plan.
Very few companies survive for long without a clearly defined business plan. It should be well thought out, and take every possibility into account, as well as employ realistic predictions for success.
Pay special attention to market factors and financial planning. These two pieces often hold the most weight in the overall success of your practice.
8. High Expectations.
Business owners often expect more from their firm than the market can sustain. As a result, they’re disappointed that plans fail, and they lose their motivation.
Every business will take on a life of its own, and you may not see the results you predicted. Always be willing to adjust your business plan and consider every avenue so you don’t expect more than your business can realistically deliver.