When skills combine with the ideas that are long lasting and practical in nature, entrepreneurship comes into existence. The taste of entrepreneurship no doubt is delicious when the mind gets an idea and starts cherishing the treasure of ideas, things eventually get easy and plans become more convenient to incorporate into the practical world. The purpose is to constitute a venture that satisfies the goals and aims of entrepreneurship alongside being a successful and acclaimed one among the consumers.
Entrepreneurship, despite its taste of success, doesn’t always taste good. Sometimes, you can expect the bitter things coming at your part too. This is because there is always a kind of uncertainty prevalent in the entrepreneurial world which makes the entrepreneur contemplate upon the eternity of the project.
This itself is a fact that even if it’s a business or a grand venture, unfortunately, cannot last longer in the mainstream market if it doesn’t do the essential efforts to keep itself intact with the changing traditions. Today the market is unpredictable because there is a flurry of businesses one reports from all sides.
The Unpredictability of the Market
You can never expect the success of one absolute business in these circumstances because there are enormous businesses battling hard for success in one single market plus the unfavourable dynamics are also responsible for creating this uncertainty that you are totally unable to compete with the modern world requirements.
So the main aim of entrepreneurship is to battle with these risks and give a continuously varying product along with the varying times to enchant the consumers.
The Anatomy of “Risk”
Risk, which apparently looks like a simple word consisting of four letters, is actually something grave with which you are dealing in the business world. A good businessman is always the one who is well aware of all the anatomy of risk. In the business world, the risks can vary from major to minor issues. These are the agents of adversity.
They can bring the worst possible changes to a company. This is why most of the companies are often defensive and careful towards risk taking. They believe that forcing a risky situation upon the venture deliberately is nothing except sheer madness which results in the fall of the company itself.
However, there are certain risks which are not intended by an individual yet they fall directly because of the carelessness with which they deal with the risky situations. So it is extremely important to handle the risks with care and an active response strategy.
Some Common Risks in Entrepreneurship
There are a number of risk factors that always circulate around the entrepreneurial world. These situations sometimes become more serious and sometimes there is just a mild hint of their presence which declares their absolute authority at the field. Some of these factors which can intervene while the growth of the business is proceeding are
- Financial Constraints
- Frauds & Reputational Risks
- Environmental Hazards
- Geopolitical Risks
- Economical Risks
Though it looks like an odd thing to say, but this is indeed a truth that competition can sometimes turn into an extremely risky factor where you are unable to make out the true strategy and have no option but to turn back which halts your progress as well. This is most common in the current scenario.
These days, the market is extending its limbs at a faster pace. Every single person is into entrepreneurship. This has made the very essence of entrepreneurship turn into a risk. You may find that even when there is a growing trend of getting the title of an entrepreneur with one’s name, there are only a few who have made it till the end because of the pressure which comes along with the entire process.
Not everyone is able to handle the pressure correctly and hence you are bound to fall in the background. The best thing to do in this situation is to set up an orderly response to the competition and always becoming proactive towards the innovation because at the end of the day, your innovation is one thing which is going to save your day.
More often there are some financial constraints that are waiting for you just at the opening doors. This is because of the lack of understanding of financial management. This type of risk is mostly encountered by young entrepreneurs who are unable to make a quick balance between the financial resources they have.
There is often a department where money is invested carelessly and this creates a gap between that department and all the other departments. You know it well that when you are going to create an unequal wall, the result is fall and nothing else. The most dangerous form of a financial risk is bankruptcy where you not just create the financial gaps but lack any more capital to fill it in order to balance the gap.
Frauds & Reputational Risks
Whenever you are initiating an entrepreneurship venture, it is not just you who is an active agent of production but the resources upon which you rely are also the names promoting the production. Sometimes, the luck doesn’t get good enough and accidentally you encounter sources that are not reputational. These fraudulent resources ingest the money and leave you with all performance.
This creates a big question mark at the reputation of your business and you are questioned by the consumers about the quality of production. This is the most dangerous form of risk because for an entrepreneur the entire thing is the reputation. When that reputation is gone, you can no longer expect to do good at the market because it annihilates your entire business growth.
There was a time when leather goods were acclaimed globally and the businesses dealing with this made a lot in the mainstream market. However, with time, the education about the reality of leather tanneries made its place in the minds of the consumer. It was not just limited to animal cruelty but also included the release of life threatening chemicals directly into the atmosphere.
This created a rift between the consumers and the sellers because global level protests were organised to stop their manufacturing as it was hazardous to the ecosystem by both ways. With time, the attitude of people regarding that industry also changed. This is what we know as the environmental risk where the consumer knows about the ingredients or the components of your product and stops using it because of the environmentally cruel components in it.
That’s why most of the companies today preach that their products are “cruelty-free” and “environmentally friendly” so that the interested ones don’t turn the products down.
Politics all around the world is another unpredictable entity. You can never be sure of the political associations. This impacts the industries and businesses a lot. When the situation is not good, the industries remain closed throughout. This makes the businesses lose their foundation and they shatter like the stack of dominos.
Many countries in the past have seen the consequence of the political tensions as their industries ended totally because of the length of the battle that engulfed every single thing one after the other. The best way to keep a check is to become well aware of the political situations going around you so that you are not left ignorant when things are changing their shape.
Just like the geopolitical risks, economical risks are also there. This is because of the instability of the global capital. Politics has a direct influence upon economics. So, if there is some kind of political tension growing on or any unfavourable condition strikes the door, the capital model automatically collapses and when it collapses the businesses also meet their end.
This is because they are no longer supported by one global market but a doomed one where the stakes are falling low at a critical pace. This has happened many times in the past. We have witnessed with our own eyes how the economic crisis of 2007-8 in America changed the world and after this the global pandemic of COVID-19 started killing all sorts of major and minor businesses because of the devastating impacts.
This is why it is always suggested to create a business plan where the economical precepts are discussed not just with reference to the present but for the future as well. This helps you to find out the necessary strategy when the time comes.
Don’t Avoid Risks, But Devise Plans
Most of the entrepreneurs have a false idea about the risks. They think that adopting strategies which can help them avoid the risks for a longer than usual time period can actually be helpful for their growth. However, to clear your assumption, this can’t work longer in an environment where there is a constant chance of risky situations.
If you are always trying to divulge risk and never to face them with a proper strategy, you cannot last long in the market because the best thing is to always plan a strategy which intends to make things better even if tough times come and try to take over the business. Once you get the idea of strategy development, you can always predict your position in times of tribulation.
The author is an M.Phil scholar conducting her thesis in Literature. As a sucker for literature, she swoons over Greek and South Asian fiction while reviewing books in her spare time. Her love for writing has made her expand her subject matter and now she pens her opinions frequently on business, finance, entrepreneurship, lifestyle, history, and literature. For a special connection with entrepreneurship, she opens up the details occasionally about it.