Risk is the first word and the thing that prospective entrepreneurs wouldn’t like to hear or face in their venture. How does risk arise? Where from risk arise? and What exactly is the risk? Risk in business could crop up majorly from:
(a) Commercial unviability of the project.
(b) Inappropriate or insufficient management processes.
(c) Mismatched marketing or total absence of marketing and business development measures.
(d) Misplacement of human resources, under utilization of human resources.
(e) Under utilization of production or service capacity.
(f) Insufficient working capital which might impact production, morale of human resources, stakeholders’ confidence, and missing delivery schedules.
(g) Imprudent financial management.
(i) Unfounded planning and strategies or delivery mechanism.
In one of the cases, I have found an entrepreneur who was adamant on gaining business even without a name and legal identity to his venture, with nil investment on marketing, promotion, with mismatched marketing resources who were ignorant of the business model, with absolutely nil inventories to serve any prospective order, unproven delivery mechanism and dangerously lack of self-confidence in his own business model. He felt that spending on any of the above processes would be risky and he was waiting for a client before he commit his investment. This, however, is a rare incident where risk is felt too sensitively.
Any time the onus would be on the business owner who should stride cautiously in every walk of his business cycle or business decisions.
My suggestion would be that the prospective entrepreneurs or existing businesses who are not able to do well should study themselves and go for honest due diligence of their business idea or model so that risk could be mitigated before it is too late.