As you will probably understand already, starting a business means taking a risk, as there is no guarantee that it will survive in the long term. Sadly, fewer than half of UK startups make it beyond the first five years, according to statistics, and 20% of these are forced to close their doors within 12 months.
Still, starting a business doesn’t have to be a reckless gamble. Despite the risks, failure doesn’t have to be an inevitability. If it was, nobody would set forth with their own business ventures.
To ensure long-term success, it is important to consider common startup risks and to examine ways to overcome them. We have highlighted two of these risks (and potential solutions) below.
Risk #1: A lack of finances
Most startup owners need money behind them to develop their products and services. They need money for marketing, equipment, and staff hires too. As such, they will usually secure funding from banks and other loan providers. If they don’t make a profit, however, they can struggle to pay back what is owed. They will also struggle to keep their business going and may be forced to shut up shop or take out other loans that can deepen their debt.
To overcome this risk, it is important to consider funding options, before and after the launch of the startup. Crowdfunding, angel investing, government grants, and borrowing from family members, are all ways to secure funding.
It’s also important to be wise when it comes to spending. The more money that can be saved the better, especially when profits aren’t guaranteed. By reducing business operating costs, more money can be set aside for paying off loans and for providing financial support in an emergency.
Risk #2: Legal hot water
Before starting a business, it is important to get a handle on business law. There are all kinds of aspects to take into consideration, including laws related to employees, workplace safety, copyright, consumer goods, and taxes. If a business owner is ignorant of particular laws, mistakes can be made, and they can then end up in very hot water. In some cases, they could lose out financially, especially if they are forced to pay fines and court costs.
To overcome this risk, the answer is obvious. If you’re just starting out in business, now is the time to brush up on business laws so you don’t break the law in error. There is a lot of advice online, including this article on legalities when forming a business.
For more advice, it is also worth speaking to a law professional. Consult with those who are versed in corporate law, such as the folks at Accuro Maxwell, and benefit from their advice and wisdom. Keep your legal professional on speed dial so you can get in touch with them if issues arise.
Finally, purchase business insurance. This can cover you for the legal claims that may be made against you so shop around until you find something that gives you the protection you need.
Despite the risks, don’t be put off starting your business. Provided you take appropriate measures to protect yourself and your business, you can mitigate any risks and have a greater opportunity to succeed. Continue your research online and browse our website for more information that could be useful to you.