The first step is always risky when making a new business. Entrepreneurs must do their best in building strong roots in order to minimize every possible failure for the investors.
In order to avoid every possible risk and failure, the team’s experience and depth risk must always be a priority. The experience and skills of a team should be taken into consideration, along with the expertise and the understanding of the business domain. An entrepreneur must first analyze the team’s skills and tasks in order to evaluate the capability of every team member.
Furthermore, when establishing a new business, the entrepreneur must always study the market for is constantly changing and evolving. The importance of the opponents must be always taken into consideration.
Being alone in a certain market isn’t safe nor having to face several opponents. It either means that the market you are stepping in isn’t available or that it is too crowded. The best solution here is to have unique goods in order to forbid any opponent from challenging or overrunning your business.
On the other hand, the financial risk is to be delicately tackled. It is always possible to start with no capital but being a founder of a new business you should always put your own “skin in the game”. More importantly, the amount of cash needed and the expected revenues for the first five years should be wisely calculated.
Moreover, pricing, marketing or distribution strategy must not be disregarded when entering a new market. For instance, offering free services and base the revenues on ads are prone to failure without a remarkable marketing investment.
Similarly to all that has been previously mentioned, the political and economic risks are not to be neglected. As a founder of a new business look for stable and secure countries where you can sell your products easily and don’t make big plans during any economic crisis such as recession.
You should always acknowledge the tax rates, tariffs, expropriation assets and repartition of profits. Sometimes “paradigm shifts” and disruptive technologies need more time to be smoothly integrated into the market. On the other hand, it might be hard to predict the feasibility and manufacturing problems; therefore, it is highly important to know which products fit better in a certain market.
Finally, business sections such as food service, retail, consulting, work at home and telemarketing with huge historical failure rates are always avoided by investors.
To sum up, starting a business of any kind for the wrong reasons is the utmost risk a founder may face. Building a successful business you need a well studied plan from the start including a good capital. Most importantly don’t forget to enjoy your new business.