Young people are ideally suited to starting a new enterprise. They are naturally energetic and creative, seeing solutions to common problems that older generations might miss.
Yet, the generations of entrepreneurs who came before you had to deal with risk before they found success – and so will you. Being an entrepreneur means taking risks to achieve your dreams.
Some of these risks are unique to you and your business depending on your field and goals. Others are common to all entrepreneurial journeys. You must weigh the potential cost versus the reward with each risk you take.
Like our founder, Woodrow “Woody” Kantner, all risks provide you with valuable experience. A little bit of knowledge of what to expect can go a long way towards helping you mitigate risk and maximize success.
Here are five of the most common risks new entrepreneurs face, as well as how you can prepare for the challenge they present.
If you are reading this, you are already a bright and motivated student who understands the value of research and planning. You know that good grades don’t just happen.
Neither does business success.
Before you start your entrepreneurial journey, do your research, make a plan, and have backup plans in place for unexpected bumps and detours. Otherwise, you’ll be forced to go back to square one every time you hit a bump in the road. Try not to get lost in the preparation and forget your forward momentum.
Do you know how much money you need to get your business off the ground? If you are producing a product, how much does each product cost to make? Where will this money come from? How do you convince people to invest in your business, and how do you instill confidence in them?
You’ll want to launch your business with plenty of money to keep it going. Of course, many young entrepreneurs won’t have the funds themselves to launch and run a successful business. If you’ve done your research as mentioned above, you know you’ll need more money than you probably think you do to get started.
That’s where investors come in.
Take a look at the most successful recent Kickstarter campaigns. What do they all have in common? How can you incorporate those characteristics into your unique business plan? How much money do you need to guarantee you will not only get off the ground but keep going if you don’t earn any money for the first week or month?
Your business plan is solid. You have the financing you need and then some. It’s make-or-break time!
The difference between the first two risks mentioned above, and this one, is that plans and finance require you to set the groundwork. Implementation is where you launch your business and send it out into the world. And that can be scary!
Here is where you need to stay on top of selling your product. What is it, and how will it make your customers’ lives better? You shouldn’t be pushy or arrogant, but you need to convince people that your product is worth their hard-earned money.
While you’re thinking about the risks of implementation, take into account the reputation you are building as a young entrepreneur. Be careful what you post in public, especially on your business’s social media accounts. Take a quick scan through the laws and rules of your industry to make sure you don’t put yourself in hot water.
The best way to reduce risk in this part of your business is to use simple common sense and a positive attitude.
A little friendly competition is healthy, both for you and your business. It forces you to bring your A-game and helps you learn as you go along.
However, certain competition can be risky for your business.
For young entrepreneurs, it’s highly unlikely your competition will be as massive and challenging as, say, Coke versus Pepsi. There’s room in the soda market for both, especially as both companies keep innovating and marketing new products. Yet look at Uber, and what happened to regular taxis and car services when they came onto the market. Yeah.
To prepare for this risk, research your field. Even babysitting is a field: how much do other sitters in your neighborhood charge per hour and per child? How old are the other sitters? Do they have cars? Are they purely afterschool sitters or weekend sitters? Finding the answers to these questions allows you to offer potential clients a competitive rate without underselling yourself. Figure out what unique qualities you can offer as a babysitter, such as foreign language tutoring or art projects.
Learning about the competition also helps you prepare for potential disruptions. As soon as the lockdown went into place, in-person babysitting needs took a nosedive. Yet some parents still needed help with their young children. For babysitters, this meant pivoting and innovating: meeting families in parks for socially distanced games, for example.
5. Maintain customers
Here’s where all your other risk preparedness comes in handy!
Once you have your business up and running, you have some customers, and you’re making a profit, what do you do next? How do you keep your current customers while bringing in new customers? Has a new competitor come around that may attract some of your customers?
Your business plan should include ways to market your product, including online ads, flyers, and a word-of-mouth campaign. Consider whether you will reward your earliest customers as an incentive to keep them on board. Don’t be shy about asking them to post positive reviews or refer their friends. Listen to what your customers are saying and be polite in responding – even when they aren’t polite or kind. Your customers are your lifeline, so losing them is a risk you absolutely need to stay on top of.
With the right preparation, entrepreneurial risks shouldn’t scare you away from taking a chance on starting your new business. We here at Kantner know you are the type of student to face risk with courage and determination! With a little bit of elbow grease and a lot of faith in yourself, we know you will be as prepared as possible for all the risks involved in starting and running your awesome new business so you can reap all the rewards you deserve.
Click here to learn how the Kantner Foundation helps young entrepreneurs by offering college scholarships to Florida high school students.