The idea that small businesses have minimal risks compared to big ones has made some entrepreneurs overlook certain things before starting a business. This blindside can limit the growth of your business.
The fact remains that risks can destroy a business and reduce its value, no matter how significant it is. Apart from the money lost, the time and effort invested will never be regained. With due diligence and in-depth research, you can identify and avoid some risks. Since the essence of starting a business is to grow, consider these risks.
Proper product articulation is one of the risks entrepreneurs overlook when starting a business
This seems simple as the product is part of the business idea. However, the inability to adequately explain what the product is about is risky to the business’s existence.
This entails explaining what the product is, the problem(s) it will solve, its edge over existing brands, if it is a blue ocean idea, and why the product is worth it.
Proferring answers to the questions will give your business a sense of direction and what it is to be achieved. Starting without an answer will make your product unsellable as it has no purpose to be achieved.
If you cannot answer the question, you can apply damage control by researching before the product is launched. Doing this will help you articulate what your product is about.
Entrepreneurs often go for ventures with the lowest barrier to entry when starting a business
A business idea that has easy entry access is a competitive one. Considering this before starting will help you strategise how to differentiate yours from your competitors.
Whatever strategy you use to differentiate your product must also be guided. If your strategy is discovered, competitors can easily copy and duplicate your product.
Therefore, go for a unique identity that cannot be replicated. Possibly create a barrier in that industry that makes it impossible for a new business to own your brand.
Entrepreneurs undermine the market space value when starting a business
Not knowing your target customers is a risk you cannot afford. The essence of starting a business is to generate returns. The returns come from the customers that patronise your business.
Therefore, you must know who the customers are, why they like the product, how they afford it, what similar products they buy, and where they purchase the products. You must have comprehensive data for this before starting your business.
The information will guide you in structuring and compartmentalising the market to suit your product and budget. The perfection of this will determine the success of your business. This is because the customer is the last point of every product.
Entrepreneurs get fixed on the budget capital, thus neglecting contingency capital when starting a business
It is risky for the capital stream allotted to the launching of a business to stop flowing. Apart from slowing down execution, it sometimes leads to the pending and cancelling of a business idea. Lack of capital has led to the death of many exceptional business ideas.
It is, therefore, good to have a contingency plan for any business idea. This can be through crowdfunding platforms, friends and family, investors, and venture capitalists.
To quickly ascertain when extra capital is needed, you can have a money plan for every step in the business plan. It further helps you measure your business plan growth and milestones achieved.
Some entrepreneurs surround themselves with the wrong team members when starting a business
It, however, takes more than just the founder to make the business work. Realising this will take a business far and beyond. Indeed, together, everyone achieves more. There is a role for everyone to play in minimising the risk in a business.
Hence, you must surround yourself with the right and best set of people and team members. Apart from the official team members, surround yourself with the unofficial ones, such as mentors and professionals in the field.
Through brainstorming ideas, team members have identified and solved many problems. Since two cannot walk unless they agree, surround yourself with people of like minds.