8 Common Entrepreneurship Risks & Challenges in 2024 [Top Tips to Overcome from It]

Despite all the glitz and glamour attached to the word “Entrepreneurship,” it is somewhat synonymous with risks. People put their efforts and luck into the market without knowing about common entrepreneurship risks.

According to a study by Statistic Brain, Startup Business Failure Rate by Industry, over 50% of all businesses fail after five years in the United States and over 70% after 10 years.

The numbers are scary – at the same time costlier!

And we’re sure this has set off an alarm in your head.

However, if you want to conquer the market, some common entrepreneur challenges should not scare you away because, in the end, it will all be worth it.

So, what are these common entrepreneurship risks that we are talking about?

You’ll know in the next 8 minutes!

8 Common Entrepreneurship Risks and Challenges

1. Lack Of Steady Paycheque

Entrepreneurs undoubtedly make an obscene amount of money. But no one becomes Steve Jobs in one day or even a few months.

This means that the path is long and full of risks. It’s pretty black and white because you have to quit your current job, give up your career, and dive deep into entrepreneurship. In the past, you had a steady source of income, but now there’s no guarantee.

These are the most serious risks a newborn entrepreneur must consider before taking the final plunge. Because in the first few months, or even a year, you will have to work towards sustaining your company instead of thinking of a whopping or steady income.

Solution: Keep a cash reserve

Let’s give you a reality check.

When you start your business, the chances are high that you will not get any customers for at least 4-6 initial months. That’s why it’s a good idea to keep at least a sufficient reserve to survive these crucial months hassle-free.

2. Stay Wary Of Your Competitors – A Major Risk in Entrepreneurship

Every entrepreneur starts a business with a resolve to stay afloat despite the high competition.

But another form of competition might not be as easy to face.

Take Uber for example. It is quite obvious how the company is disrupting the market, or the taxi market to be exact.

This is one of the major risks in entrepreneurship that you have to take in your entrepreneurship journey.

Unfortunately, just like the competition, there’s no way to prevent disruptions. Entrepreneurs can only work hard amid the risk and hope to come untouched.

There are some examples of when companies went completely bankrupt due to disruptions.

For instance, the same thing happened to “Blockbuster” when Netflix disrupted their market forcing them to file for bankruptcy protection (Source).

Have a look at this infographic, which tells a perfect story of how things went downhill for Blockbuster due to the disruption created by Netflix.

netflix vs blockbuster, entrepreneurship risk

Solution: Run a proper analysis

You can overcome such risks only if you properly analyze your industry. You need to identify potential disruptions that might affect you in the future so that when the time comes, you are equipped with all the workable solutions for such challenges.

For that, we highly recommend you run a SWOT analysis!

It is a study undertaken by an organization to identify its internal strengths and weaknesses, as well as its external opportunities and threats. 

It should be noted that you shouldn’t wait for other startups to come out and offer something new. Stay ahead of time and keep on introducing new technology regularly.

3. Fluctuations In Currency

Globalization is rampant today, there’s no doubt about it. Every entrepreneur strives to tap into the overseas market by increasing their outreach.

But this scenario involves one of the most common entrepreneurship risks: uncertain currency fluctuations. If these fluctuations work against you, you will be trapped in rising exchange rate losses.

The chart below shows a glaring scenario: US companies dealing overseas suffered tremendously due to strong dollar fluctuations (Source).

entrepreneurship risk

Remember, it works both ways, whether you are supplying overseas or getting supplies from the global market.

An ideal solution to this risk in entrepreneurship

This entrepreneurial challenge has no surefire solution as it is somewhat difficult to predict them. 

The best entrepreneurs are those who closely examine these future risks and find a way to keep their profits unharmed after considering them.

4. Cyber Security Risks

One of the most common entrepreneurship risks and challenges, especially in today’s world is – cybersecurity risks. Everyone knows the drastic effect (regarding costs and valuable data) if your confidential information leaks.

Cybersecurity Ventures states, “Global cybercrime costs will grow by 15 percent per year over the next five years, reaching $10.5 trillion USD annually by 2025.”

entrepreneur risk

Cybersecurity risks lead to trust issues, which can amount to millions and billions of losses. So, every entrepreneur should be prepared to face such risks in the future of their business.

Solution: Identify the threat and use two-factor authentication

First, identify prospective cybersecurity risks and see what areas need security.

After all, the first step to solving a problem is identifying what needs solving. Once you are through with that, make sure that you use a two-factor authentication system.

The two-factor authentication method requires you to enter a password and a code (which you will receive on your smartphone), which only you can access.

While you are at it, don’t forget to encourage your employees to do the same and use proper spyware removal tools or hybrid cloud backup solutions to keep critical data safe.

5. Maintaining a Steady Customer Pipeline

Convincing your first client is hard enough, but even when your business is up and running, maintaining a steady customer pipeline is not straightforward.

It is also somewhat of a difficult task to get people to put their faith in you when you are at the early stage of your business.

For that, you must build a loyal community and a large network of prospects to generate a steady flow of leads in your pipeline.

Solution: Get referrals and use word-of-mouth marketing

This is where you can leverage tactics such as word-of-mouth marketing and customer testimonials, and the list goes on and on.

Also, if you see that someone in your network might help you get more leads, don’t hesitate to reach out. Ask for referrals, recommendations, and anything else to spread the word.

You can even use Bing or Google Ads to grow your client pipeline.

Came as a shocker, right?

Listen to what Duane Brown, the founder, and head of the strategy at Take Some Risk, Inc., has to say about Bing Ads and how he got a steady lead flow through the platform:

Moreover, if you want to start building a community using a referral chain and word of mouth, you can get information regarding word-of-mouth marketing and other customer referrals.

6. Trusting Your Business Partner or A Key Employee

Many entrepreneurs overlook this; however, trusting a key employee or even your business partner is one of the most common risks of entrepreneurship.

For one, when you are just getting started, you are unlikely to have hordes of employees. Instead, you will probably have a business partner and only a few employees.

To get things up and run the business smoothly, you will have to put a huge amount of trust in your business partner or a key employee.

But remember, this risk is unavoidable as you don’t have many options at this stage of life.

So many consequences can arise if this trust turns out to be misplaced.

Firstly, your trusted employee or partner will be privileged to have access to important data and information regarding your company. Putting all your absolute trust in one person’s ability might also lead to missed timelines.

7.  Sacrificing private capital

Want to become an entrepreneur? That’s wonderful!

But have you considered the funding required to start your business venture?

Many people can pull it off, but many cannot.

More often than not, you have to shell out your private savings to fund your business venture.

This is one of the most common entrepreneurship risks as it burdens you even more.

If God forbid, your business venture fails to pick up, you might not even have safety capital to fall back on. This is a big risk; however, once things start to pick up, you will be happy that you took it.

8. Investing Your Personal Time & Health

If you think being an employee takes away your social life and the maximum amount of time (and health), you haven’t seen anything yet.

Being an entrepreneur is a tedious task that will take away a lot from you.

Initially, you might even feel like the whole business venture only takes away your resources without giving away anything in return.

Moreover, the lack of returns and profits might take a toll on your mental and physical health, but now that you have started your business, don’t give up.

Maintain a healthy lifestyle by starting your mornings with productive routines, ending your nights with enough sleep, and taking breaks throughout the day. Yes, power naps count too. In fact, Sleep Advisor experts noted that power naps improve productivity and overall well-being.

Consider this as nothing more than a few obstacles in the path.

Always remember that you are not the only one taking these risks in entrepreneurship; in fact, they are among the most common ones. However, once everything works out, we assure you it will be a risk worth taking.

Conclusion

So, these were some common entrepreneurship risks and challenges for your upcoming year.

However, the key is to embrace and surpass these risks with confidence.

The best way to undermine these common risks in entrepreneurship is by creating a perfect balance between the risks and rewards.

And remember, don’t expect a high ROI (return on investment) if you are not willing to take some risks.

That said, don’t take too high a risk that you have bad instincts about, especially if you don’t have a dependable plan to fall upon.

This doesn’t mean that you will always succeed. Sometimes, you might have to take risks that can not deliver the desired outcome.

But learning from your mistakes is the best way to go about it.

So, let us know which entrepreneurship risk or challenge you are worried about the most.

Also, if you are at an early stage of your startup, we know that you need to address some other challenges besides those mentioned above.

For that, we recently covered some great points.

You can read the article here: 6 Biggest Challenges Faced By New Startups.

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