You Will Face These 5 Risks When Starting Your Business

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You’ve got your idea on paper, you’ve created a business model that you believe will work but.... success still isn’t guaranteed yet. At this stage everything you have written down is all assumptions.

Now you will have to identify the risks that could tumble your idea.

The most common risks you as an entrepreneur will face when you’re starting a company are product risk, market risk, financial risk, team risk, and execution risk.

Let’s have a look at them:

Product risk

Product risk is the possibility that the solution you are building will not meet customers’ demands or expectations.

You need to understand the key features of your product, and the problems or needs it must solve for your customers. Next, you want to figure out whether you're addressing a big enough market. Are there enough people? Are you building the right product? And are you building it at the right time?

There are loads of questions, but to mitigate product risk you want to have some solid facts around the above otherwise you may still face product risk.

Market risk

Market risk is about understanding your competitive space and alternatives to your solution.

Minimising market risk is about thoroughly understanding your customers and not just from a demographic standpoint, but a psychographic attitude.

What you want to make sure is that you know why your customers buy a product over another. Where they buy it from and how they purchase it.

Gathering this deep customer insight will allow you to differentiate yourself competitively, and really have an upper card on alternative products and services (ie. your competitors).



Financial risk

Financial risk is the possibility of losing all your money.  You want to understand where your capital comes from. Whether it is from investors (here is a link to learn more about the investment process and why investors might be a good idea), or whether you're bootstrapping your company. You have to understand your pricing, and whether you can sustain your business in the future.

If you are thinking of providing a freemium model, you somehow need to sustain that before you run out of passion and money. Same goes for trying to make your product cheaper than competitors, can you still cover your costs?

I have seen many companies fail not because they had a bad product, but because they weren't around long enough to come out the other end and become profitable.

Can your idea be profitable from day one?

Team risk

As startups are a tricky venture to start on your own, it's essential to have other people with particular skills on your team. This is Team Risk and it helps you to analyse whether you have got the right skills needed to take a company forward.

Try not to do it all alone. This is one of the 6 biggest mistakes entrepreneurs make. Surround yourself with the right people that can help you move in the right direction.

Execution risk

One of the last risks you have to look at is that of execution risk. Now, many startup founders focus on the products on such a micro level, that they forget the macro level, that is the visionary strategy.

You want to focus on balancing your 30,000-foot view of the world (that is the direction you’re heading), with the product development process. This allows you to continue to build quality products while maintaining your roads towards your vision into the future.

Don't be aSegway, focusing all on developing the best possible product while forgetting about your business model and product adoption. Keep track of both your product development and vision of where you want to take it.


Some risks mentioned can be controlled, while others are a little harder to control.

A good way you can manage them is to understand what your risks are and once you are aware of them, you can keep them in your peripheral and watch them closely.

Surround yourself with people who have been there, done that and learn from their mistakes. It's going to take a whole lot of risk away from you and enable you to build a solid business. Make sure you are tapped into our community where people can help you avoid some common mistakes