Techblog
Startup 101: Five risks entrepreneurs must take
Giving up a regular pay cheque to start your own business can be very risky but rewarding if it's successful. Understanding the risks involved can help entrepreneurs prepare themselves for the challenges ahead.
During the hard times at work, it can be fun to daydream about giving up the corporate shackles and starting your own business. The personal benefits to running your own business can be lifechanging if the business does well, but there are also some bumps you will need to overcome on the way to success.
1. Investment of personal time
In most jobs, there's a set time for working and a set time for switching off. While you may not always get to leave work on time and you may have to work through a few lunches, when you work for yourself the line between personal time and business time gets very blurry. You may find yourself sending work emails, preparing spreadsheets and putting the final touches on reports during weekends and deep into the evenings.
In an effort to get your business off the ground, you may need to take on more than you expected. Not only will you be doing your regular work, you'll also have to do the finances, marketing, sales and more. While you might be happy to do this when you see the professional benefits, there may be a negative impact on your family and social life. Having support from those around you is vital, even if relationships are strained or neglected for a while, and creating a plan to hire help for the most time consuming areas can help bring back a healthier balance.
2. Relying on personal savings
Although starting your business can pave the way to an independent lifestyle and richer future, most entrepreneurs find the first stage very financially taxing. Don’t be surprised if you reach into your savings for the first couple of years while your client base and reputation grows. Having a strong plan in place so you know where your break even point should be, when you should be financially solvent and what would happen if you came across unexpected expenses.
3. Depending on a small number of clients
When you get started, it's likely you'll have more than a few clients on board to help you make the switch to working for yourself. Until your business grows to include others, you'll be on precarious ground as you realise you need to keep all your clients happy. You'll spend extra time making sure everything is perfect for them, keeping them happy and nurturing a relationship that will hopefully last long into the future. While this is a positive, it also means you’ll have less time to find new clients, which makes it even more important to keep your existing projects on track, although once you get to a stable position you should look to hire some help - either so you can find new clients or so that they can do that for you.
4. Trusting colleagues and friends
As well as relying on a small number of clients, you'll also need to depend on a small number of staff. When you go solo, you'll likely get support from others you know, perhaps in a similar situation to yourself, and you'll need these lifelines. Perhaps they'll do work that is similar to you and they can help when you get snowed under. Or maybe you'll need expertise in an area you're not qualified. Either way, you'll soon come to depend on a few trusted colleagues and friends, which - due to time constraints - can be stressful if they are forced to turn down a work offer from you.
5. Giving up regular benefits
With most full-time jobs, your employer will offer a few perks to sweeten the deal - perhaps you'll receive some sort of health insurance or CPF along with your paycheque. When you work for yourself, however, you'll have to organise these on your own and you may also have to say goodbye to sick days and holidays for a while.
Starting your own business can be a very rewarding venture. But remember: if it were easy, everyone would be doing it. Along the way, you may encounter problems, obstacles and hurdles that will test your resolve. But if you stick to it and put your full attention on improving your service, you may well find yourself with a successful and stable company.