8 Common Entrepreneurship Risks & Challenges in 2023 [Top Tips to Overcome from It]

Despite all the glitz and glamour attached to the word “Entrepreneurship”, it is somewhat synonymous with risks. And 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 per cent after 10 years.

The numbers are scary – at the same time costlier!

And we’re sure that 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 be all 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

No doubt, entrepreneurs make an obscene amount of money. But no one becomes Steve Jobs in one day or even in a couple of months. 

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

These are the most serious risks that a newborn entrepreneur needs to 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 just start with your business, the chances are higher 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 a sufficient amount of reserve in order 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 there’s 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 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 either. An entrepreneur can only work hard amid the risk and hope to come out 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 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 need to identify the 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. 

And it should be noted that, 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 strives to try to tap into the overseas market by increasing their outreach.

But this scenario comes up with one of the most common entrepreneurship risks, which is the uncertain fluctuations in currency. If this fluctuation somehow ends up working against you, then you will be trapped in the 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 (Source).

entrepreneurship risk

Remember, it works in both ways, whether you are supplying overseas or you are 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. 

And the best entrepreneurs are those who keep a close look at these future risks and have a way to keep their profits unharmed after taking this into account.

4. Cyber Security Risks

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

And as per Cybersecurity Ventures, “Global cybercrime costs to grow by 15 per cent per year over the next five years, reaching $10.5 trillion USD annually by 2025.”

entrepreneur risk

The cybersecurity risks not only lead to trust issues but also amount to millions and billions of losses. So, 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 areas needed security. 

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 on 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 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 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 the list goes on and on.

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, recommendations, and anything else to get the word around.

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 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 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.

There are so many consequences that can arise in case if this trust turns out to be misplaced. 

Firstly, your trusted employee or partner will be privileged to so much important data and information regarding your company. Plus, putting all your absolute trust in one person’s ability might also lead to a 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?

Many people are able to pull it off and many are not. 

More often than not, you have to shell out your own 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, then you might not even have a safety capital 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. 

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

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 your 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 undergoing these risks in entrepreneurship, in fact, it is one of the most common ones. However, once everything works out, we ensure you that it will turn out to be a risk worth taking.


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

However, the key is to embrace these risks and surpass them 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 run into risks that can not deliver the outcome you desire for. 

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

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

Also, if you are at an early stage of your startup, we know that you need to take care of some other challenges apart from the ones 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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