Launching a startup is both exciting and risky. There’s a ton of potential waiting there for you, as well as a lot of downfalls that you could experience if you’re not careful. The following five factors are important for any startup owner to understand.
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Market Risk
You need to know who your customer is and why your product or service will make their life easier. Why will your customers buy your product? How and where will they be making their purchases? To figure this out, do some market research. Figure out why your customer base is buying similar products. Identify how the customers are getting to the market and then ask yourself if you can build a similar route. This will help you determine how high of a market risk you’re taking.
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Execution Risk
Don’t get so invested in the details that you forget about the overall goal and direction of your brand. On the other hand, don’t get so involved with your dreams that you overlook the details. You need a healthy balance of both.
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Product Risk
According to New Business Survival, “Before launching your startup, you need to decide what it is you’re going to be selling.” This sounds like it would be easy to figure out, especially for someone who’s already had a great business idea. However, you’ll need to explain what your product is and how it solves your customer’s problem. You need to convince your customers that your product is worth investing in. If you’re not able to do this effectively, your business won’t make any money.
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Team Risk
No one person can prevent every bad thing from happening to your startup. However, when you have a team of people you trust, you have a larger defense against problems. You’ll use your team for a host of things, including playing around with new ideas, bringing those ideas to the market and determining how you’ll grow in the future. As an entrepreneur, hire a team of people who believe in your brand and who have unique skills to help consistently move your business forward.
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Financial Risk
There are a lot of ways for startups to get financing. Everything from crowdfunding to angel investors and borrowing money from family is used to launch a business. However, you need to make sure that you’ve identified the schedule on which you’ll need money – which milestones will require a new influx of cash? This should be a major part of your business plan. Starting your business is just the beginning; you need to also plan to grow it. This will also give your potential investors more confidence in their investment, which could encourage them to write you another check when you need it.
Sources:
http://www.huffingtonpost.com/paul-hermann/what-are-the-biggest-chal_b_7203398.html
