Creating a startup and taking control of your own financial future can be thrilling, but it can also be scary. You’re taking a risk based on the market potential of your products or services and hoping that there’s enough demand out there to sustain it and that you can capture that demand.
But the question of whether a business will float or swim isn’t the only risk that you have to be prepared for. Here, we’re going to look at five of the most common concerns and why you should be ready to deal with them.
The cashflow slowdown
Finding your feet when first starting a business can be hard on any entrepreneur. This is when the idea has to prove itself worthy and find the market to take it off. Many business owners expect that they’re going to be seeing a loss for some time until they become self-sustainable. However, many businesses will see similar cashflow slowdowns throughout the year. The best way to get around these is to anticipate them. Figure out the seasonal high points and low points of the business. When you can identify those slowdowns, you might scale back your costs in order to ride them out or look for business funding options to give you the cash to see them through before paying them back when business picks back up. Eventually, diversifying the business to add new revenue streams that keep the cash flow healthy during these slowdowns should be the goal.
The real emergency
There are financial operational risks, which are the cashflow problems that just about every business should expect to encounter. However, there are plenty of emergencies that can be hard to anticipate and can strike a business out of nowhere. Fire damage to a building, loss of property, and much more. Without the right backup a real emergency in a business can sink it entirely. That’s why every entrepreneur should start looking at business insurance plans the moment they start using expensive equipment or start renting property for the business. While these protections won’t entirely solve the problem, they can help mitigate the costs of these emergencies greatly.
The data loss
Nowadays, most businesses are getting further and further connected to the digital world. In particular, we’re storing more data than ever before. It helps us better understand our customers, how our business works, and keep track of vital documents. Losing that data can be more than a setback it can be disastrous. Where private data is concerned, many businesses that suffer a data breach don’t survive two years after it happens. Investing in digital security, particularly if you collect any customer information that you’re legally obliged to protect, is essential. Having data recovery to help you get back on your feet much more quickly is important, too.
The legal questions
When it comes to the business, there is no benefit to assuming that you’re keeping things on the up-and-up. In particular, there is one group that you’re more legally obliged to than any other and that’s your employees. Stamping out discrimination, harassment, and bullying in the workplace is an employer’s duty. To that end, crafting an HR policy can help you set guidelines for now only how to prevent those kinds of actions, but to find the most appropriate way to deal with them when they come up. This should cover a wide range of different legal obligations, too. The employee handbook is the start, but it also addresses how you keep employee files, how you deal with things like disciplinary measures and terminations, and more.
The growing pains
Success can be as dangerous to a startup as any of the other businesses mentioned above. The majority of new businesses don’t make it longer than 24 months, and the number one cause of that premature failure is the inability to scale effectively. Scaling properly requires a lot of planning to get it right. You have to identify how the business is going to grow and whether there’s a market to support the larger costs. You have to budget for those costs, including new locations, equipment, employees, and more. Then you have to plan out the whole process, making it as quick and painless as possible without disrupting the flow of business too much.
Problem-solving and risk management are two skills crucial to every entrepreneur. If you’re not able to anticipate serious threats, neutralize them, and recover from them, you are likely to not make it past your second year after opening your doors.