8 Common Entrepreneurship Risks & Challenges in 2020

Despite all the glitz and glamour attached to the word “Entrepreneurship”, it is somewhat synonymous with risks. And people are barely starting out more often than not talk 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 per cent after 10 years.

This is a hefty number!

And I am sure this has alarm bell ringing in your mind.

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

So what are these common entrepreneur risks that I talk about? Read on to find out some common entrepreneur risks that most entrepreneurs face in their business endeavour. 

Common Entrepreneurship Risks

1. Lack Of Steady Paycheque

Entrepreneurs make an obscene amount of money – True. But no one becomes a Steve Jobs in one day or even in a couple of months. The path is long, not to say very uncertain and full of risks.

It’s pretty black and white: you have to quit your current job, give up your career and dive deep into entrepreneurship. Erstwhile you had a steady source of income, but now there’s no guarantee.

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

Many entrepreneurs are resort to work on independent gigs part-time, at least in the beginning so that they have a safety net to fall back on.

Solution: Keep a cash reserve

Let’s give you a reality check. When you just start with your business, the chances are that you will not get any customers for at least 4-6 initial months. That’s why it is a good idea to keep at least the budget for these months in reserve. Make sure that you have enough money in your bank to keep your business afloat.

2. Stay Wary Of Your Competitors 

Every entrepreneur starts a business with a resolve to stay afloat despite the rampant competition. But there’s one another form of competition that 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 risk that you have to take in your entrepreneurship journey.

Unfortunately, just like the competition, there’s no way to prevent the disruptions either. An entrepreneur can only work hard amid the risk and hope to come out unscathed.

There are some examples when companies went completely bankrupt due to disruptions. The same thing happened to “Blockbuster” when Netflix disrupted their market forcing them to file for bankruptcy protection.

Have a look at this infographic that 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 emerge out of such risks only if you run a proper analysis of your industry. You should discern the potential disruptions that might affect you in the future so that when the time comes you are prepared for such challenges.

I’d suggest you run a SWOT analysis: a study undertaken by an organization to identify its internal strengths and weaknesses, as well as its external opportunities and threats. Also, don’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. And every entrepreneur is very astutely trying to tap into the overseas market by increasing their outreach.

But this scenario paves the way for one of the most common entrepreneurship risks, that is the uncertain fluctuations in currency. If this fluctuation somehow ends up working against your favour, then you would have to worry about rising exchange rate losses.

Look at the chart below that shows a glaring scenario of how US companies dealing overseas suffered tremendously due to strong dollar fluctuations:

entrepreneurship risk
It works both ways, whether you are supplying overseas or you are getting supplies from the global market.


This entrepreneurial challenge has no surefire solution as it is somewhat difficult to predict them. The best entrepreneurs are those who keep a close look at these future risks and have a way to keep their profits intact after taking this into account.

4. Cyber Security Risks

One of the most common entrepreneurship risks, especially in today’s world is cybersecurity risks.

Everyone knows the drastic effect it would have on your company if your confidential information leaks out. No one without proper authority should be able to access important and confidential employee and company data.

We recently saw the repercussions of Cambridge Analytica scandal and how biggies like Facebook were engulfed in the data breach scandal. This was followed by public indignity for Facebook as well as their CEO Mark Zuckerberg. And this wasn’t the end of it.

According to a survey, Facebook users’ confidence in the company has plunged by 66 percent as a result of revelations that data analysis firm Cambridge Analytica.

Facebook privacy breach

And Facebook is not the first company that came under fire due to the data breach. Have a look at one of the biggest data breaches occurred in significant companies:

entrepreneur risk

The cybersecurity risks not only lead to trust issues but also amount to millions and billions of losses. Every entrepreneur should be geared to face such risks in the future of their business.

Solution: Identify the threat and use two-factor authentication

First, you have to identify prospective cybersecurity risks and see what are the things that can be secured. After all, the first step to solving a problem is to identify what needs to be solved. Once you are through with that, make sure that you use a two-factor authentication system.

Two-factor authentication method requires you to enter a password along with a code (which you will receive in your smartphone) something that only you have access to.

While you are at it, don’t forget to encourage your employees to do the same and use proper spyware removal tools.

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 easy.

It is also somewhat a difficult task to get people to put their faith in you when you are at the early stage of your business. You have to work on building a loyal community and a large network of prospects to get a steady lead flow 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, customer testimonials, and so forth to

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

You can even use Bing 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 get started with building a community using a referral chain and word of mouth, you can get every information regarding word of mouth marketing, and other forms of 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 entrepreneurship risks.

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 the things up and running you will have to put a humongous amount of trust in your business partner or a key employee. Now, this risk is unavoidable as you don’t have many options at this stage of life.

There are so many issues that can arise in case this trust turns out to be misplaced. Firstly, your trusted employee or partner will be privy to so many important data and information regarding your company. Plus, putting all your absolute trust in one person’s ability might also lead to miss in timelines.

7.  Sacrificing private capital

Want to become an entrepreneur? That’s wonderful!

But have you thought of the funding that you will require to start your own business venture?

I am sure you are relying heavily on outside funding but not every entrepreneur is able to pull it off. More often than not, you have you shell out your own private savings to fund your business venture.

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

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

8. Investing Your Personal Time & Health

If you think that being an employee takes away your social life and the maximum amount of time (and health), then 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 is only taking away your resources without giving away anything in return. The lack of returns and profits might take a toll on your mental as well as physical health but now that you have stepped up started your business, make sure that you don’t give up in between.

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

Always remember that you are not the only one undergoing this risk, in fact, it is one of the most common entrepreneurship risks. However, once everything works out, it will turn out to be a risk worth taking.


So these were some common entrepreneurship risks for your upcoming year. However, the key is to embrace these risks and surpass them with aplomb.

The best way to undermine these common entrepreneurship risks is by creating a perfect balance between the risks and rewards. 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 sometimes you will always succeed. Sometimes, you might have to run into risks that might not pay off. But the best way to go about it is by learning from your mistakes.

Which entrepreneurship risk or challenge are you worried about the most? 

Also, if you are at an early stage of your startup, you need to take care of some other challenges apart from the ones mentioned above. For that, we recently covered some great point. You can read the article here: 6 Biggest Challenges Faced By New Startups.

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