The risky business of risk in startups

A singular fact in life across the world exists: what is born must eventually die. The same can be said for the life of business. The inherent risk in starting and operating a business can be likened to that of an epic gamble, putting your money and life on the line to be successful.

There are over 5.5 million businesses in the UK, with 99% of those businesses small or medium sized businesses, so it is safe to say that most businesses starting up today have a competitor. In 2015, 383,000 businesses were born and 252,000 businesses died, so for every three businesses started two failed.

Here highlight the four main types of risk your business can face and how you can mitigate potential disaster, maybe even making your company stronger for the challenge.


Strategic risks usually come from within your own industry. A new competitor moves into town offering cheaper products and services, or even just offering an additional choice for your customers.

Always keep an eye on your competition in your area, set up Google Alerts so you are made aware of any changes to your competition, and there is no problem with visiting them for inspiration. Keep a grip on your customers with excellent customer service and loyalty schemes to keep your customers happy.

Industry changes can cause huge problems. The biggest cause for change is rapidly advancing technology, which affects almost all industries. The internet has caused changes that not many people could predict, who would have thought that having a website and social media would be imperative to marketing your business 20 years ago?

Keep up to date with new trends in your industry. Subscribe to industry magazines and follow your industry leaders on Twitter, this way you will not be caught unaware of upcoming changes that may effect yous business.


Every business needs to comply with laws and regulations. When starting your business you need to be aware of any regulations that may hinder you in your path to success.

This has certainly been a problem for all businesses in the UK recently with Auto-Enrollment coming into effect, and the National Living Wage increasing the minimum wage for a large number of employees across the country.

Adherence to health and safety laws can force you to change your normal ways of working. If any workplace accidents occur to employees or customers lengthy and expensive legal proceedings can be result to put your business at risk.


Managing your daily financial operations is possibly the most important daily activity a business can do. It does not matter if you provide the best service in the world, if you do not have money coming in you can not operate as a business.

Cashflow management is the biggest gamble of all. You need to keep your clients and customers happy, that sometimes involves extending some credit for work done. However, you still need to pay employees, yourself, as well as paying the bills.

You need to be aware of who owes you money, how you can get it from them and ensure they pay you on time. But as a safety net, it is a good idea to insure your business against large or doubtful debts.


Operational risks are risks that are most in your control these include: recruitment, supply chain, transportation, accounting, IT systems, regulations.

For example, if you recruit someone to an important position and they are not as good as you expected them to be, you may have to go through the costly recruitment process again.

Cybersecurity is a relatively new risk for businesses, however it is one that needs more investment. Data has become a valuable commodity for businesses and if hackers breach your systems there is a lot of potential to ruin long established relationships and trust built with your customers.

Entering business is a gamble, but one that can pay off if you navigate the risks.