Tuesday, August 25, 2015

Risks of Being an Entrepreneur

Who says being an entrepreneur is not risky? Well, indulging yourself in the biz world can be as risky as swimming in a swamp full of sharks. In fact, it is more risky in the business world. Ashbrook (n.d.) claimed, "Entrepreneurship means risk. The risk of walking away from security and career path to create something new. The risk of taking yourself and your family into an unfamiliar storm of stress and uncertainty. The risk that you've miscalculated an opportunity, or your own internal resources as you plunge into a new venture,". [h]

If you're a person that loves taking risks, you go girl (or boy)! Life is not exciting without risks. Love risks? Indulge yourself in business/entrepreneurship. There are many risks that an entrepreneur must face when indulging himself in the biz world. Let's look at some of them!

1. Market and Opportunity Risk

Zwilling (2012) quoted, "There is always less risk with a well-defined problem in a large and growing market. All the people in China is a large and growing market, but all the people with cancer is much more well-defined. It’s hard to make money in a shrinking market, or with a solution that is “nice to have” versus painfully needed,". [j]

2. Competitive Risk

There is no doubt at all that when you're indulging yourself in business/entrepreneurship, you will have competitors. Hence, you will face competitive risks. Zwilling (2012) said, "Think seriously about the number and clout of your competitors. Having none is a red flag (may mean no market), but having more than a couple of large ones may mean this is a crowded space. Even in an open space, you need intellectual property, like patents, to keep potential competitors from overrunning you,".

3. Financial Risk

Obviously, there will be a financial risk in entrepreneurship. Zwilling (2012) claimed, "Very few businesses can be started without money. You as the founder will be expected to put your own “skin in the game.” The business plan should be realistic about how much cash will be required to break-even, and how big the return will be for investors in the first five-year timeframe,". Simply said, in the biz world, you'll either win or lose; profit or loss. 

4. Operational Risk

Zwilling (2012) claimed, "Some businesses require huge support or administrative infrastructures. For example, vehicle fuel improvements require service stations and maintenance shops nationwide, before they are viable. Even small operations can have breakdowns of specialized equipment and complex support processes,"

Other than what have been stated above, Aman Shah & Soon Teik Lan (2013) claimed that risks of being an entrepreneur also include uncertainty of income, long hours and hard work, risk of losing entire investment, high stress level, difficulty in obtaining customers, complete responsibility, difficulty in obtaining loans and discouragement. [3]

Love taking risks? Be an entrepreneur!


Aman Shah, S. H. & Soon  Teik Lan, C. (2013). Entrepreneurship. Selangor, MY: Oxford Fajar Sdn. Bhd. [3]

Ashbrook, T. (n.d.). Risk in Entrepreneurship. Entrepreneurship.org. Retrieved August 25, 2015 from http://www.entrepreneurship.org/resource-center/risk-in-entrepreneurship.aspx [h]

EconFree. (2012, July 26). Take the Risk. Be an Entrepreneur. Retrieved August 25, 2015 from https://www.youtube.com/watch?v=wNutNzJ7NNA [i]

Zwilling, M. (2012, March 25). Ten High Risk Drivers Every Entrepreneur Faces. Business Insider. Retrieved August 25, 2015 from http://www.businessinsider.com/ten-high-risk-drivers-every-entrepreneur-faces-2012-3?IR=T& [j]

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