The Risks and Rewards of Entrepreneurship
The Risks and Rewards of Entrepreneurship
A start-up or entrepreneurial venture is usually formed to test and validate innovative ideas in the form of new technologies, products and services that are currently unavailable in the market. These experimental businesses challenge the established norm by venturing into unchartered territory. They, therefore, tend to encounter frequent road blocks in their early development stages.
Research shows that over 90 percent of start-ups fail and of the surviving 10 percent, half will fold after five years. Reasons for this include a mismatch between the product and target market, funding issues, employees who lack domain, marketing and business knowledge, technical problems and legal complexities.
Here are some major start-up risks that could derail a business even before it gets off the ground:
Unclear product or service goals
To convince investors to invest in your business, it is important for entrepreneurs to be able to clearly articulate what their product or service is, how it can address an existing problem and how it can be marketed.
Lack of market fit
Being unsure of who your potential customers and competitors are, and why your product or service would stand out from the crowd will sound the death knell of your entrepreneurial dreams.
Wrong team members
A strong talent pool is crucial to the success of a business. It is vital to form a diverse team with different skillsets, who are able to multitask and have work experience relevant to the various positions available.
Bad financial management and the inability to secure financing or investor interest could spell the end of a young start-up.
Failure to invest in a robust security infrastructure could be very costly in terms of additional cash outlay needed to restore data and install additional cybersecurity measures in the event of a malware attack or data breach.
Risk of burnout
When work-life balance becomes compromised, start-up founders may suffer burn-out due to stress, overwork and the inability to disconnect from work responsibilities.
On the flip side of the coin, entrepreneurs enjoy the freedom of being their own boss, making their own rules and revelling in a sense of pride and fulfilment in seeing their ideas come to fruition.
Here are some of the rewards one can reap from launching a start-up:
Flexible working schedule
Being your own boss allows entrepreneurs to plan a work schedule that accommodates their needs and this can have a positive effect on their mental and physical wellbeing. They could even become digital nomads and combine leisure travel with work.
Being responsible for their own company, start-up founders are self-directed, motivated, fully invested and willing to go the extra mile to make their business a success.
Alignment of career with beliefs
Entrepreneurs have the opportunity to align their core values and beliefs with the work they do, enabling them to feel a tremendous sense of fulfilment and satisfaction when their visions become reality.
Freedom to choose your colleagues
Entrepreneurs have the complete freedom to choose their co-workers and clients, and the kind of company culture they want to build.
New businesses and new markets created
Entrepreneurs can create new markets and industries for their products and services and these can become future drivers of economic growth.
Entrepreneurs create opportunities for employment, induce increased competition resulting in higher productivity and generate wealth creation to give a big boost to the national economy.
As owners of their own businesses, all after-sales revenue is theirs to keep. After deducting employees’ salaries and overheads, entrepreneurs can either save the balance or reinvest it into the business.
Start-ups are not all doomed to fail and one’s success depends on how well risks are managed and overcome.
CBInsights. “The Top 12 Reasons Startups Fail”. Published 3 August 2021, https://www.cbinsights.com/research/startup-failure-reasons-top/
Eisenmann, Tom. “Why Start-ups Fail”. Harvard Business Review. Accessed 17 August 2022, https://hbr.org/2021/05/why-start-ups-fail
Embroker. “A Guide to Startup Risks and How to Manage Them”. Accessed 19 November 2021, https://www.embroker.com/blog/startup-risks/
Greater Birmingham and Solihull Local Enterprise Partnership. “5 Benefits of Entrepreneurship in the Economy”. Published 12 October 2021, https://www.gbslepgrowthhub.co.uk/news/5-benefits-of-entrepreneurship-in-the-economy
Indeed. “What are the Advantages of Entrepreneurship? Published 23 March 2021, https://www.indeed.com/career-advice/finding-a-job/advantages-entrepreneurship
Kotashev, Kyril. “Startup failure rate: How many startups fail and why?”. Failory. Last updated 9 January 2022, https://www.failory.com/blog/startup-failure-rate