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The Risks In Business – Do You Have What It Takes To Run A Business?

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The following is a guest post from Tim, a finance blogger who believes that a person can become rich with a rich mindset. More than financial freedom, he believes in changing the world by first changing himself before others.

What are the risks in business and what to do about them? Entrepreneurship is not for the faint of heart. While I am sharing these with you, these should not intimidate or stop you, but rather prepare you for possible outcomes. Like Sun Tzu said in his Art of War, “know yourself and know your enemy and you need not worry about the outcome of a hundred battles”.

Before you go into uncharted waters, you might want to ask yourself if you have what it takes to run a successful business. I think that whether you can or not only depends on whether you can answer “yes” to all of the points below.

Possibility of Failure – The number one risk in business is definitely the possibility that your business will fail. Is it something that we can do nothing about? Absolutely not. There are ways to reduce the risk of failure and that is by equipping ourselves with as much knowledge as we can, and to make sure that we are passionate about the business that we are getting ourselves into.

Unpredictable Business Climate – Experience of course would help tell you what could happen next. However, for us rookies, this is one of our handicaps. There are times when your business will have a roller coaster ride, and what do you do when your income seems to landslide? Would your emotion also get a ride? Remember that financial decisions should not be made based on emotions, so be prepared as the market does often get mood swings.

More Responsibilities – Contrary to popular belief, having a business actually means more and bigger responsibilities. You will not be dealing with only one boss like you probably have in your job. You will actually have a lot more bosses as your customers grow in number! However, with proper delegation and careful planning, you can rid yourself of some responsibilities in exchange for a portion of your income without depriving yourself of the technical work that you love to do. It should be worth the time since you’ll have more time to think on how to grow your business rather than working in it. After all, as a business owner, growing your business is your primary responsibility.

Long Hours of Work – Contrary to popular belief, starting a start up takes a lot of hard work. They say that the start up phase is the most productive phase of a business. That also means that during the first few years of your business, you will have less sleep and work longer hours. This is why I stressed above why it is important that you’re passionate about your line of business. If you enter into a business that you don’t like, you will not work hard enough and sooner or later, you will quit and your motivation will die along with your business.

Crystal’s Questions:  I don’t know whether you need more of a left or right brain to successfully run your own business, but whichever it is, I think I have it.  Running all of my blogs is a joy and an addiction.  Whether your dream is recycling aluminum cans or running a dog kennel, it is doable with a little finesse.  Have you ever started your own business?  What were some of the risks you took on?

FYI:  I worked at a dead end cubicle job from 2005-2011 for about $30,000 per year.  I went self-employed in July 2011 and make between $70,000-$90,000 through blogging, professional pet sitting, hubby's reffing, and our rental home.  If you’d like to start your own site (link to my free step-by-step guide), I highly suggest checking out Bluehost (my referral link with a nice discount for you, PLUS a free custom header banner from me!).  Please contact me any time at budgetingfunstuff*at*gmail*dot*com with questions or just to brainstorm! I’d love to help!
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17 thoughts on “The Risks In Business – Do You Have What It Takes To Run A Business?

  1. I believe in businesses that can be started while still working at a regular 8-5 job. If the business takes off and is making a great profit, ditch the job. If not, then it’s time to try a new venture on the side, but at least you’ve still got your regular income from your job.

    I am working on developing my website and my wife is beginning a photography business, plus we both have a regular job. I believe that we will ditch our jobs within the next 5-10 years! 🙂

  2. I agree with the poster above. THe best time to start a business is when you already have your own job. That way you aren’t desperate and make rash, stupid decisions. You already have a secure job and can take time in developing the idea, and even dumping it if it sucks.

  3. I think you really have to do your research and try it on the side (as said above), unless you are independently wealthy. You can’t just wake up one morning and open a new store. You need a business plan, financing, blah blah blah.

    We have not ever started our own business as we would have a hard time giving up our income from our current jobs. Plus, the economy still has a long way to go, especially where I live. So, we will be staying put.

  4. Agreed! A great time to start a business is when you still have a job. OR, turn a job loss into an opportunity, especially if you have severance pay! My father started our family business three years ago when he got laid off. He had 6 months of severance to rely on while he built up his business.

    I think the hardest transition for our family was finding and paying for private health insurance (Family of 3 costs them $2K a month).

    Also, if you become self-employed remember that you typically can not receive unemployment compensation if your business fails.

  5. I don’t own a business, but my boyfriend does. The risk he is facing right now is people risk. At a certain point, you want your business to grow bigger. so you need to find the right people to work with you and work for you. It is hard to find someone who shares the same business philosophy, mentality, development goals and work ethics.

    A group is only as strong as its weakest link. So I think finding the righ people is one of the most important element in business.

  6. I’m working on starting my own business from home/online, and I know there’s a possibility that I can fail, but I think knowing the risks up front helps you prepare better.

  7. I’d definitely would do a few things on the side first to see what sticks. I don’t think I’d like the stress of trying to make money quickly when many ventures take years to get established. On the flipside, the stress may make me more productive and move faster. I guess it depends on what environment you thrive in. Stress may make some people make stupid and rash decisions, but for others, it might be a good catalyst.

  8. There are risks in anything you do, but the rewards are greater if it is your own business. Your own business, if successful is an asset that can be sold at some time. Your earnings should be greater than working for someone else.

  9. I agree that you may end up working many more hours if you are your “own boss”, but I know in my heart there just must be something different about building something of your own. That’s why I so enjoy my little blog that is in the red yet struggle through the daily grind of my “paying job.” Of course, I am also a bit of a control freak. But still, to be able to be somewhat creative, and to have the ability to build something for yourself, I can’t think of anything better. I hope while I am on this Earth I get a chance to take the plunge at some point, and have my own business. My field is very conducive for it anyway.

  10. There is the fact. Business is about planning and without planing there will be always the risk of failing. So, it is required a long research time to find out whether a business idea is a good idea. Part of that planning it is included all points you are giving above.

    The key point of everything here is working hard, very hard and if you fall just stand up and try again.

  11. Hi Crystal,

    I run a small business – a laundromat. I think my biggest regret was taking on a huge debt risk. If I had it to do over, I would have started smaller and grown larger with cash. I would have also gotten a property inspection (tried to skimp and learned my costly lesson). But hey – the experience pushed me over to the debt free side of life & led me to start the Debt Free Divas. So, there ya go 🙂

    Take Care,

  12. Toni – great point. some of the most valuable lessons are learned from trying things out first hand. yes it may be painful and costly, but you will end up learning a lot from it.

    i have started several successful businesses. the biggest risk in each one has been the uncertainty involved. another thing to consider in the brief list above is the risk of litigation – often an afterthought, but as we all know could be catastrophic in nature

    always, at the very least, incorporate your business and create a corporate veil/separation between your business entity and personal finances (yes that goes for personal blogs as well)

  13. With all the risks emphasized, unless you really love your job, working for yourself will feel great. There is a higher sense of accomplishment from successfully running a business compared to just fulfilling your tasks for an employer.

  14. I would have to agree that starting your own business does incur a long number of hours to get it started up! I really don’t think you start feeling the highest strain until you start a business with high start up costs (processing plant, store with inventory, etc). I haven’t experienced that yet, but I imagine it is very stressful!

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