Starting up a business is never easy, I say it’s daunting to say the least. A big part of success is attributed to staying focused, goal-driven, and positive when starting up a business. But, as I run a Brisbane bookkeeping firm, I’m also partial to caution. Inspirational coaches would encourage you to focus on the great things possible, I’m saying we should not overlook considering what could go wrong.
Knowing and assessing the risks will not diminish success. In fact, taking them into consideration will enhance your success rate.
Here are the common business startup risks every entrepreneur should know;
Do you have something to sell? Of course, you do. But, do you have enough market for it? Will your target consider it worth the investment they will be paying for it? Having a top-notch product is not enough to ensure success. You should be able to communicate the value of your product. There should be a need or a problem that it can solve, people who will see value and a reasonable price that people will be willing to pay for it.
Avoid product failure by conducting a full research of the market and how the product will fit into it. Know the best marketing strategy, set a reasonable price, and learn the best way to sell.
The market is the most volatile element of business. You cannot control it. Fad and trends come and go. People change the way they dress, eat, travel, and live. What is valuable for them today could be their garbage tomorrow. What could look like a solid product today might be a worthless junk tomorrow.
Necessities like food and shelter change slower than wants products like clothes and jewelry. If you’re selling a fashion item, take into consideration the turnaround of trends. Be more conservative in your production. Expect changes and be ready to adapt your product to the changes.
A good example is my business of bookkeeping in Brisbane. The clouding movement a few years back was so huge. Had we not anticipated the migration from the traditional way to online bookkeeping, we would have folded up the business.
Business Implementation Failure
After preparations and projections, we can only guess how the business will run. Anything could go wrong; a perfect design on the drawing boards turns too complex in actual production, a delivery system too slow, or a huge order to be filled too soon. Most startups are focused on the launch that they easily get unawares when operational problems arise.
The best way to avoid the risk of implementation failure is to get to the details of the business. As much as you would like to focus on the big picture, it is the small steps and processes that will hold the business together. Run through all processes, know and keep open all your options, and do not take short cuts.
The most common risk of launching a startup business is the failure to properly manage finances. Usually bogged down with limited resources, new businesses will tend to holdback expenses until a positive cashflow is seen. Vital opportunities are often lost due to this cash-saving strategy. On the other hand, some entrepreneurs would grab every opportunity of making a sale and using up company’s resources on it. Only to end up negative in the cashflow, zero liquid assets, and productivity on hold.
First rule in running a business is to create an account separate from your personal money. This will keep your financial perspective of the business clear. Set an operation fund and stick to it until you see money coming in. Prioritize cash sales and keep your assets liquid. Do not borrow money with high interest charges for a project that will only end up in your overdue A/R.
Starting up a business is always a risk. But a good entrepreneur should be able to minimize, if not eliminate all known and preventable risks. Working with professionals and experts can contribute to your success. Considering all the angles of your business and work with people who will complement your needs. A lawyer, a financial analyst, or an experienced bookkeeper in Brisbane can help you take control of risks.