4 Risks You Should Consider When Launching Your Start-up Company

Do you guys remember the first time you were selling things to your friends? How much excitement it evoked, although the profits brought were low? Now, you plan to take a further step ahead, which is starting a business. Starting a business has never been more exciting! The start-up industry is full with opportunities, innovations and potential. However, it is important to keep in mind that there are risks involved, as well. Below are the risks you should consider when launching your start-up company.

1.Product risk

You must decide what products/services you will be selling. You must be able to explain what your product is, the problems it solves, and why it’s worth investing in it. If you cannot do that, you cannot expect people to pay attention, neither investors to put money to invest in it.

You must make sure your product addresses a big market, within the right opportunity and right time. Your goal, at the end of the day, is to prove that you are actually building something that people want or something that solves people’s problems.

2.Financial risk

Young entrepreneurs, nowadays, are fortunate enough to have tools such as Kickstarter and Indiegogo that enable crowdfunding to raise money/capital. With the money that you have raised, you can no longer worry about the financial resources.

Besides, you may look for other resources to get financial support, such as entering the accelerator programmes by various agencies. In Malaysia alone, many agencies offer accelerator programmes to help you build your start-up. Especially towards the end of the programme, where each start-up will be given a chance to a public pitch-talk in front of investors.

There are a couple accelerator programmes that are coming up in the upcoming months, such as maGic Global Accelerator program (GAP) and Exabytes cockroach program. Moreover, the Malaysian government has come up with a lot of financing schemes such as start-up financing, grants and SME loans, which you could enrol or participate in.

3.Team risk

One person can never do the entire job or eliminate the risk solely by himself. It is very important for you as a founder to look for a co-founder who shares the same values, passions and most importantly, believes in the dream you are trying to achieve.

Finding one co-founder has never been an easy task. The right co-founder will either help you build or destroy your dream. You could find your co-founder basically anywhere! Let’s take a very good example here - Uber.

Travis Kalanick found his co-founder for Uber on Twitter. A time list of Tweets can be found on Uber estimate.

4.Short-term competition risk

You must be able to prove that you’re different from the existing players in the market. There are many different competitors of different sizes, capacities, financial situations, or business models and these companies will be attacking your target market from many directions.

For example, let’s look at the e-hailing industry in Malaysia. Uber formally entered the Malaysian market in the year 2013 by offering ride-hailing app services that connect drivers and customers with a tap of the finger on the mobile app. Meanwhile, Grab Car in 2014, also introduced similar ride-hailing app services as Uber.

Although, they are similar, there are clear differences in how they operate and charge their customers. Uber charges a base fare, and on top a fare based on the distance and time travelled, whereby Grab charges a fixed rate based on the estimated distance.

Now, with this example, you could see how Uber and Grab differentiated themselves in the market. Always try to stay further ahead from your competitors by using S.W.O.T analysis. With this, you get a clearer picture of your overall industry in which you are competing.

As most of the things, launching a start-up can be risky; however, every investment, be it money, time, or effort, brings a certain extent of risk. However, this shouldn’t be perceived as a discouragement. With the above risks in mind, it is still exciting to start a start-up company/business. Always look for a mentor to guide you or talk to an existing founder of another start-up, so that you could listen to their stories and experience, before you make a move. A thorough planning would help to foresee the upcoming challenges and risk, and hopefully avoid them.

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