Having a business of your very own is a fantasy many people share. Of course it doesn’t just happen by snapping your fingers.
A lot of hard work goes into any startup. First you must have a product or service people need. If it’s already on the market, your version has a greater chance of success if it is unique in some way.
You must have a cash flow analysis, a business plan, and a marketing plan. You will also most likely need an accountant and a lawyer to help with the legal aspects. On top of that you must have the capital or backing to get your startup off the ground.
But there are also 3 startup risks you should avoid.
1. Failure of Product or Service
You began with an idea of what you wanted to do or sell in your start-up. However, there are many factors that affect its success, or lack thereof.
For instance, will people want or need it? Is it a reasonable price to pay? Will it be a quality product or service?
You could meet all of these things and still fail in your venture. Why? Did you market for your new business successfully?
Many things can go wrong when you begin a startup. One of the best ways to avoid them is to plan ahead.
2. Legal Issues
There are plenty of legal risks when you begin a new business. Without proper planning and a good business attorney you could run into any one of them and put your startup at risk of failure.
Permits and licenses must be obtained, if applicable. Loan agreements, lease agreements, billing and collecting laws, and taxes must all be handled in the proper manner.
The repercussions of mishandling any of these, as well as many other business aspects, could mean complete collapse of your startup. Therefore, as mentioned before, having a lawyer, accountant, and good planning on your side can help you avoid failure.
3. Financial Risk
Financial risk is one of the many startup risks you should avoid. But having your startup fail from lack of finances can be prevented.
Make sure you are not already in massive debt before trying to fund a startup. Pay off your outstanding credit cards, auto loans, and any other debt you may have.
It would help if you also do not have a huge mortgage on your home. In addition, you should not put a mortgage on your home to fund your startup.
What happens if you lack the funding for your startup? If you already have outstanding debts you are struggling to pay and your income has dried up, you could be facing bankruptcy.
Having large amounts of debt before you try to get your startup going is asking for trouble. To get out from under it you could take on a second job or side hustle. Or, you could downsize your home to eliminate or reduce your mortgage.
Consider eliminating as much debt as possible to sidestep the possibility of financial failure of your startup.
It’s easy to daydream of having your own startup. But eliminating the risk of failure is a little more difficult. Prepare ahead of time with good planning, financing, and professional help to reduce the risk of failure to your startup.