Freddie Achom on the risks worth taking
If you’re considering leaving a steady job at a large company to launch your own start-up, you’ll most likely be nervous. You may come across people who advise you not to do it or insist it’s too risky.
However, risk-taking is pretty much synonymous with successful entrepreneurship. To take that leap and start your own business, you’ll often have to put your career and personal finances on the line. But for many, these risks are worth taking.
The chance to be autonomous and control your own future is worth it, but it’s important to fully understand the potential risks coming your way. Here are a few that I think are worth flagging up before you make any big decision.
Be prepared to ditch steady pay
To make the break and start your own business, you’ll have to leave your current job. Whether this is a graduate position or your long-term career, it can be daunting. If you can have a back up plan in place, such as the chance to resume your career if your business doesn’t take off, then do so.
For most people starting out, it is risky to leave a steady pay cheque behind. There is no guarantee of personal income, particularly during the first, vital months of your new company’s life. It’s also likely you’ll be far too busy to sustain any alternative income.
Be prepared to sacrifice your savings
This won’t apply to everyone, as some entrepreneurs are in the happy position of relying solely on external funding for their start-up. This could be in the form of angel investment, government loans and grants or money from crowdfunding.
Those who haven’t secured 100% external funding may well have to use their own savings to get things going. While you may not have to completely empty your nest egg, it’s likely that you’ll need to use enough personal money to make a large dent.
You must have regular cashflow
Even with a line of credit available to you, securing regular cash flow is stressful and often difficult. While you can see a profit on the horizon, dealing with day-to-day necessities while your revenue may not match your costs is hard.
Bills often add up fast, and if you don’t have enough coming in you may run short on things like paying staff. You should be prepared to address your cash flow every day.
Dealing with consumer interest
You can do as much market research as you like, but it’s never 100% possible to gauge interest in your business accurately. People can be unpredictable, and even if the data is going your way, there’s always the chance that you’re overestimating your company’s prospects. If your projections are too far off, this could be a problem. Remain realistic at all times, and plan for less success than you want.
Building trust in other people
When you start out, you will most likely have a very small group of people working with you to try and get it going. It’s inevitable that you will have to put a huge amount of trust in a few people, particularly if they have the kinds of skills you need and are willing to do what it takes for a start-up to succeed.
You’ll need to follow strict timelines
Start-ups always have to deal with tight deadlines for product launches and milestones. Finances are generally fragile, and investors want to see tangible results. This results in many entrepreneurs having to make goals contingent on certain deadlines, which become critical. This may mean long hours, late nights and stress, as well as the ability to think fast if it’s not going to plan.
Losing your personal time
Entrepreneurship can certainly take its toll on some people. It takes a lot of work, a lot of hours and often a lot of worry.
The rewards can be great, but you have to be prepared to live this kind of lifestyle, at least for a while.
Should these risks put you off becoming a start-up business owner? Absolutely not. Switch it around and see these risks as necessary problems to solve before you achieve your goals. You can’t avoid risk as an entrepreneur, but you can think ahead, prepare for them and work out ways to mitigate them.
