Entrepreneurial risk – what is it and how to predict it
Posted: Sun Dec 22, 2024 6:34 am
What are we talking about? Entrepreneurial risk is the probability of not receiving profit or losing it due to negative circumstances. A company can influence some problems, predict some, insure against financial ones, but there are some, such as, for example, a lockdown, that spare no one.
What to do? It is recommended to predict the probability of risks and then minimize their consequences. But to do this, you need to understand all possible types of entrepreneurial problems and their classifications.
In this article:
What is entrepreneurial risk?
Types of entrepreneurial risk
Internal business risks
External risks associated with business activities
Regulation of business risks
How to predict business risks
How to minimize risks
Frequently Asked Questions about Entrepreneurial Risk
In-Depth Guide: How to Cut Your Ad Costs by 25% with Artificial Intelligence
Download for free
What is entrepreneurial risk?
Business risks are obstacles that a company may philippinen vorwahl whatsapp encounter. They often lead to negative consequences for the business:
Decrease in profit compared to planned indicators
For example, a company that purchased a batch of raw materials before opening expected to sell 500 items in the first month of operation. At the same time, the management expected to receive a profit of 100 thousand rubles.
Decrease in profit compared to planned indicators
Source: shutterstock.com
However, due to a seven-day delay in the delivery of raw materials, which arose due to force majeure circumstances, the company was able to sell only half of the planned volume - 250 goods. As a result, the actual profit was reduced to 50 thousand rubles.
Unforeseen losses
For example, a person decided to open a business, but a month after starting work, a fire broke out in the room above and his studio was flooded. This led to unexpected losses: he had to buy new tools, change furniture and cancel client visits for several days.
Such losses can affect the company's reputation, degrade the quality of services, violate agreements with partners and even lead to the liquidation of the business.
Read also!
"B2B Marketing: Key Features, Promotion Channels"
Read more
Types of entrepreneurial risk
There are several types of business risks that entrepreneurs may face:
Political risks are associated with a change in power or a deterioration in the situation of individual political groups.
Legislative business risks arise as a result of changes in laws that may entail additional costs for entrepreneurs. For example, the introduction of mandatory labeling for some goods may require the purchase of special equipment, payment for participation in the relevant system, as well as changes in internal production processes or the hiring of new employees, which entails additional costs for their salaries.
Natural risks include the impact of natural disasters and catastrophes that can destroy infrastructure or paralyze the operations of enterprises in affected regions.
Macroeconomic business risks depend on the state of the economy not only within the country but also at the global level. This includes inflation, exchange rate fluctuations and other economic changes that can negatively affect business.
Each of these risks can be divided into more specific categories, the most common of which include:
Financial risks
They arise if the entrepreneur's activities are related to monetary transactions, securities or currency. Among financial entrepreneurial risks, several subcategories are distinguished:
Currency risks are related to fluctuations in exchange rates, which can change in a short period of time. This is especially important in transactions with foreign partners, when the difference in rates can significantly affect the results of financial transactions.
Credit risks arise when a borrower is unable to repay a loan on time.
Investment risks relate to investments whose returns may not meet expectations. This happens for various reasons. For example, investments may be needed elsewhere before their payback period is over, or inflation may significantly reduce the returns on these investments.
Commercial entrepreneurial risks
They are related to the very essence of trading activities. These may be cases of damage to goods, problems with their quality, difficulties in transportation or sale of products, which may negatively affect the business.
Increase Your Profits by 10X: 5 Key Metrics You Must Track
Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
Read more posts on my personal blog:
After working with over 300 online projects , I can guarantee: monitor these metrics weekly and your company will not only survive, but also increase its profits by 10 times!
In the context of sanctions and crisis, knowing the ROI of your advertising decides whether your business will be successful. Tracking these 5 critical indicators is the key to your prosperity.
What you get for free:
5 Key Metrics to Increase Profits by 220%
Advertising Channels Efficiency Calculator: Optimize Your Budget and Increase ROI by 70%
A Killer Commercial Proposal Template That Increases Conversion to Deals by 60%
We have prepared all the documents and templates with formulas for you. And yes, it is FREE:
Download documents for free
Already downloaded
153114
Production risks
They arise at various stages of the production process. These may be interruptions in the supply of raw materials, failures in technological processes, loss of working time or deterioration in product quality, which leads to a decrease in prices or the need to adapt to changes in the market.
Tax risks
Associated with losses arising from tax issues. These include unexpected tax audits, penalties resulting from these audits, and errors in tax reporting that may result in penalties and fines.
What to do? It is recommended to predict the probability of risks and then minimize their consequences. But to do this, you need to understand all possible types of entrepreneurial problems and their classifications.
In this article:
What is entrepreneurial risk?
Types of entrepreneurial risk
Internal business risks
External risks associated with business activities
Regulation of business risks
How to predict business risks
How to minimize risks
Frequently Asked Questions about Entrepreneurial Risk
In-Depth Guide: How to Cut Your Ad Costs by 25% with Artificial Intelligence
Download for free
What is entrepreneurial risk?
Business risks are obstacles that a company may philippinen vorwahl whatsapp encounter. They often lead to negative consequences for the business:
Decrease in profit compared to planned indicators
For example, a company that purchased a batch of raw materials before opening expected to sell 500 items in the first month of operation. At the same time, the management expected to receive a profit of 100 thousand rubles.
Decrease in profit compared to planned indicators
Source: shutterstock.com
However, due to a seven-day delay in the delivery of raw materials, which arose due to force majeure circumstances, the company was able to sell only half of the planned volume - 250 goods. As a result, the actual profit was reduced to 50 thousand rubles.
Unforeseen losses
For example, a person decided to open a business, but a month after starting work, a fire broke out in the room above and his studio was flooded. This led to unexpected losses: he had to buy new tools, change furniture and cancel client visits for several days.
Such losses can affect the company's reputation, degrade the quality of services, violate agreements with partners and even lead to the liquidation of the business.
Read also!
"B2B Marketing: Key Features, Promotion Channels"
Read more
Types of entrepreneurial risk
There are several types of business risks that entrepreneurs may face:
Political risks are associated with a change in power or a deterioration in the situation of individual political groups.
Legislative business risks arise as a result of changes in laws that may entail additional costs for entrepreneurs. For example, the introduction of mandatory labeling for some goods may require the purchase of special equipment, payment for participation in the relevant system, as well as changes in internal production processes or the hiring of new employees, which entails additional costs for their salaries.
Natural risks include the impact of natural disasters and catastrophes that can destroy infrastructure or paralyze the operations of enterprises in affected regions.
Macroeconomic business risks depend on the state of the economy not only within the country but also at the global level. This includes inflation, exchange rate fluctuations and other economic changes that can negatively affect business.
Each of these risks can be divided into more specific categories, the most common of which include:
Financial risks
They arise if the entrepreneur's activities are related to monetary transactions, securities or currency. Among financial entrepreneurial risks, several subcategories are distinguished:
Currency risks are related to fluctuations in exchange rates, which can change in a short period of time. This is especially important in transactions with foreign partners, when the difference in rates can significantly affect the results of financial transactions.
Credit risks arise when a borrower is unable to repay a loan on time.
Investment risks relate to investments whose returns may not meet expectations. This happens for various reasons. For example, investments may be needed elsewhere before their payback period is over, or inflation may significantly reduce the returns on these investments.
Commercial entrepreneurial risks
They are related to the very essence of trading activities. These may be cases of damage to goods, problems with their quality, difficulties in transportation or sale of products, which may negatively affect the business.
Increase Your Profits by 10X: 5 Key Metrics You Must Track
Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
Read more posts on my personal blog:
After working with over 300 online projects , I can guarantee: monitor these metrics weekly and your company will not only survive, but also increase its profits by 10 times!
In the context of sanctions and crisis, knowing the ROI of your advertising decides whether your business will be successful. Tracking these 5 critical indicators is the key to your prosperity.
What you get for free:
5 Key Metrics to Increase Profits by 220%
Advertising Channels Efficiency Calculator: Optimize Your Budget and Increase ROI by 70%
A Killer Commercial Proposal Template That Increases Conversion to Deals by 60%
We have prepared all the documents and templates with formulas for you. And yes, it is FREE:
Download documents for free
Already downloaded
153114
Production risks
They arise at various stages of the production process. These may be interruptions in the supply of raw materials, failures in technological processes, loss of working time or deterioration in product quality, which leads to a decrease in prices or the need to adapt to changes in the market.
Tax risks
Associated with losses arising from tax issues. These include unexpected tax audits, penalties resulting from these audits, and errors in tax reporting that may result in penalties and fines.