by Umar Farouk Kabir | Apr 19, 2022 | Business & Finance
Do you want to start your own business? If you have the entrepreneurial spirit, you most likely have some huge ideas about how you want your company to run and the vision you have of it in the foreseeable future. While there is a balance between being practical and pursuing ambitious ambitions, most entrepreneurs will tell you that in order to see your business take off, you must be willing to dream big and take tremendous risks. This does imply that you will fail at times, but failing is an unavoidable aspect of being an entrepreneur.
Starting a business is a gamble, no matter how well you plan and prepare. To be honest, it’s a combination of risks. Will your money last long enough for you to make a profit? Are your personnel up to the task? Is it possible for you to compete in the market? You can reduce danger, but you can’t totally eliminate it.
In this article, we will be highlighting the major risks of starting a new business that a lot of entrepreneurs overlook.
So, let’s look at the risks of starting a new business.
What are the Risks of Starting a New Business?
Starting a business from the ground up is no simple task, and entrepreneurs are well aware that they must make sacrifices in order to thrive. Building a business takes a lot of time, work, and forethought. Many of the usual mistakes made by new leaders may be avoided with good research and rigorous study.
However, if you have little to no experience, you may not be completely aware of all the dangers and obligations you should be aware of before committing to business ownership. Be sure to use this article as a guide to enable you to set up your new business as smoothly as possible.
8 Risk of Starting a New Business
1. Ignoring Minor Details
One of the major risks of starting a new business is the tendency to overlook the small details. When launching a business, it’s sometimes necessary to anticipate mistakes in implementation. Some leaders are so preoccupied with the broad picture that they ignore important nuances. This might lead to serious issues.
Delegating responsibilities to your peers is a wonderful strategy to reduce such a risk. It’ll be simpler to pay attention to detail and avoid mistakes that might lead to greater difficulties down the road.
2. Environmental, Political, and Economic Risk
This is another major risk of starting a new business. Some factors are beyond the control of a strong business strategy or adequate insurance coverage. Companies and new entrepreneurs may encounter some uncontrollable dangers such as wars, and recessions. Although an underdeveloped nation may have a large market for a product, these countries might be unstable and risky, or logistics, tax rates, or tariffs can make commerce difficult depending on the political atmosphere at any given moment.
Furthermore, certain company sectors have a history of high failure rates, making it harder for entrepreneurs in these industries to obtain investors. Food service, retail, and consultancy are among these industries.
3. Market Risk
The market for a product or service can be influenced by a variety of things. The economy’s ups and downs, as well as new market trends, put new enterprises in danger, because one product may be hot one year but not the next. When the economy is bad, individuals are less likely to acquire luxury items or non-essentials.
A rival may take market share if they introduce a similar product at a cheaper price. Entrepreneurs should do a market study to evaluate market conditions, product or service demand, and consumer behavior.
4. Inventory Over-Commitment
When you have more things than you can sell, it’s difficult to grow a business. Instead, work on developing more lean production procedures that will allow you to meet demand as it arises. If market conditions or consumer preferences change, you’ll be able to pivot to alternative items as needed.
The capacity to manufacture in smaller numbers helps with cash flow and allows you to invest more in research and development, marketing, and other areas of your organization to keep it nimble.
5. Financial Risk
Another risk of starting a new business is the financial risk that could be incurred by the entrepreneur. An entrepreneur will require cash to start a firm, which might come in the form of investor loans, personal savings, or funds from relatives. The founder will have to “put their money where their mouth is.”
Within the broader business plan, each new firm should include a financial plan that shows income estimates, how much capital would be necessary to break even, and the projected return for investors in the first five years. Failure to plan correctly may result in the entrepreneur’s collapse, leaving investors with nothing.
6. Mental and Emotional Stress Risk
The financial dangers of launching a business are frequently discussed, but the mental and emotional commitment is rarely discussed. You’re devoting a significant amount of time, energy, and space to your company, which should not be overlooked. There’s no turning back once you’ve started. You must be on top of your business at all a time to guarantee that it is running smoothly and that your staff is prepared to lead it to success.
While running a business, it’s critical to check your mental health and ensure that you’re taking care of yourself at all times. Your health comes first.
7. Debt Risk
This is probably one of the deadliest risks in starting a new business. You might lose all of your money and wind up in serious debt. This isn’t a joke: many first-time businesses lose money and end up in a worse situation than they were before. If they have the opportunity, some people can borrow money from rich family members, but not everyone does.
You must cover all of your bases and prepare for a defeat. Diversify your assets and avoid going all-in on a new business. If you can, set up backup accounts, emergency funds, or credit lines on demand. If you’ve reached an agreement with a venture capitalist, have them ready to help. Take chances when your company requires them, but don’t go bankrupt doing so.
8. Fierce Competition
An entrepreneur should be aware of his or her rivals at all times. If there are no rivals at all, it might mean that the product isn’t in demand. The market may be saturated or the firm may struggle to compete if there are a few larger rivals.
Additionally, entrepreneurs with fresh ideas and developments should pursue patents to safeguard their intellectual property from the competition.
Conclusion
This brings us to the end of our list of 8 risks of starting a new business. Don’t allow the dangers to deter you from pursuing your dreams. To keep the dream alive, try to foresee potential problems and have contingency measures in place to cope with them. Consider how you’ll handle it if a consumer takes an unreasonable amount of time to pay.
Will you be able to discover other providers if costs rise? Have you purchased enough insurance to protect yourself against some of the potential disasters? Despite the risks, successful entrepreneurs understand that they can’t succeed if they don’t take action.
FAQs
What are some of the risks of starting a new business?
Risk of being indebted, mental stress, market risk, competition, environmental risks
What questions should I ask when starting a business?
In the industry, who are my main competitors?
What Is the Market’s Reaction to This Sector?
What sets my solution apart from that of my competitors?
Who is the ideal customer for me?
How Will I Promote My Company?
Will My Business Have a Soft or Hard Launch?
Is it possible to completely eliminate risks before starting a business?
No. it is in fact impossible, although, it is very possible to minimize risks.
What are some factors for me to consider before starting up my own business?
- Assess Your Skills.
- Check for Resource Availability.
- Prepare a financial plan.
- Prepare yourself to fail.
You might also like: How to get paid to read books online
Metadata: Starting a business is a gamble, no matter how well you plan and prepare. To be honest, it’s a combination of risks. Will your money last long enough for you to make a profit?
by Johnson Temiloluwa | Apr 5, 2022 | Business & Finance
The name or brand “Dangote” doesn’t sound foreign to you, if it does then you are not a true Nigerian. I could even push further and say not a true African. But I wouldn’t, let’s stop in my country. Recognizing his name and the facts about Dangote means he is doing something right in the business world, hence, someone with his kind of experience with business has a few things about himself and his business that could inspire every businessman. Recently, I wrote about quotes from Dangote that are nugget worthy and will motivate you. In this article, I’ll share with you facts about Dangote and 15 things about him every businessman should know.
Who is Aliko Dangote?
Aliko Dangote is a 64years old business magnate and the richest man in Africa. He is the founder and CEO of the Dangote Group. He was born in Kano, Nigeria and his education was mostly in Egypt, Cairo.
Dangote comes from a well-known business inclined family, he is the grandson of Alhaji Alhassan Dantata; he was the richest person in Africa at the time he was alive. He ventured into business at the age of 21. Aliko Dangote owns the second-largest sugar refinery in the whole world, the largest cement factory in the world (again), one of the largest flour mills in the world, and the number two largest fertilizer plant in the world.
According to Forbes, Dangote is worth $14 billion and has maintained topping the list of the richest men in Africa for more than 10 years.
Dangote is a quintessential and successful businessman and a philanthropist.
next, I’ll be sharing with you the things every businessman should know about him. They will be factual as I will be adding his words to each point.
Things Every Businessman Should Know About Dangote
There are people who think that because Dangote is from a rich successful business family, he is privileged, and not every business owner can learn from him. This notion is understandable but stay with me, the things I’ll be sharing with you will probably change that notion.
Regardless of your money status or how long you’ve been a business person, there’s something you can adopt into your business from knowing these facts about Dangote.
1. Dangote Understands the Need for Passion
Here’s what he said during an interview with Bloomberg when he was asked to share a business hack.
We had already studied doing 300,000 barrels a day back in 2005. At that time I couldn’t even fathom a larger refinery. I had no financial capacity. Then in about 2010, we paid all Dangote Group’s debts, which amounted to $2 billion…We don’t want to listen to the critics, because their intention is to destroy us. We are using our own money. This is my lifetime project. I have to back it up with my own life to make sure it is delivered.
There is no way you can have a population of 320 million in West Africa and no self-sufficiency. So the first thing to do is food security. We have land, we have water, we have the climate—we shouldn’t be a massive importer of food. With modern farming, you can get 8 to 10 tons per hectare. I believe Dangote Group is in the right position to drive this trajectory.
This statement oozes passion from every angle. He had a huge amount of debt to pay but his passion for what he does as a business kept him going. Among many other things, It takes passion to keep at a business, especially failure to some extent looms.
Also, I believe that before a business, there’s a person behind it, and there’s a passion driving the business in the person. Do you get it?
2. Dangote is Hungry for Success and Confident While at it
In the interview he had with Bloomberg, he said a lot of inspiring things and I’ll point out one of them again.
Beginning in 2020 our major investment will be in the U.S. and Europe… Beginning in 2020, 60 percent of our future investments will be outside Africa, so we can have a balance.
Let’s say that by 2025, I’m looking at [putting in] between $20 billion and $50 billion [in Europe or the U.S].
Our business strategy has always been like that, yes. We don’t want to be No. 2 in anything that we do. We want to be No. 1. Worst case, we can be No. 2 but targeted to become No. 1
Put in mind, this was a well-successful man already. Everyone knew how successful he was but, he was hungry for more success and it kept him on his toes to do more, be more, and have more.
3. Provide Valuable Goods and Services
When Dangote was asked why he chose to be involved with cement. His reply would shock you;
I think actually what I figured out was looking at the entire African continent, especially sub-Saharan, and saying, “What do we actually produce?” What I learned is that the majority of African countries imported cement. The better way, I thought, would be to empower Africa – to meet our own infrastructural needs so that we could be more self-sufficient.
Personally, I think this is where business owners get it wrong. They provide a service that is not a solution. Dangote realized a sector that was lacking and built a business up from there. Dear business owner, before venturing into a business, make sure to find what solution it will provide.
4. Dangote is Thoughtful
There’s a trend that goes on around business owners which is taking up an interest in selling what is trendy and popular. Dangote thinks otherwise and he did differently. Here’s what he said:
The majority of people here made their money through oil. But Dangote has never ever dealt in oil, which is to prove that you don’t have to be in oil. In Nigeria, oil has really damaged our thinking. Everyone is thinking about oil, oil, oil. And we are one company that has made a success without doing that.
Business owners, you do not have to follow the trend of what other business people do. Look carefully, there’s something else to be done. Think deeply, relating to the previous point, there is a solution that people need, you just have to find it.
5. Dangote Is Bold and Daring
There’s a saying that, “only a bold man makes the bold moves”. Before a business gets successful, an entrepreneur must have taken a move that was out of their comfort zone. Can you think of yourself as being bold? No? A business person should be able to do this and this is one of the facts about Dangote that I find really inspiring as someone that is interested in business.
We make a lot of bold moves, which other people find really difficult to take. We always dream very big, and we’re committed to investing in Africa… the only way to move Africa forward is for people like us to take very bold moves. I never worry about being too bold. In business it’s good to be aggressive, but with a human face.
The above statement is what Dangote said in a recent interview.
6. Dangote is Consistent
What makes a business known for the value it has to offer is the consistency in the running of the business.
Dangote says:
To hold on to consistency, find ways to remove hitches that come with entrepreneurship.
7. Dangote Appreciates People and Hire the Smart Ones
I always make sure I hire people smarter than me.
A business only thrives when there are various heads with different brilliant task execution. Dangote is aware of this so he hires smarter people, that way, things get done with the help of these people’s brains.
8. Dangote Wants to Make People Happy
He said:
My grandfather once told me the soul of business is not making money, it is making people happy and I have held on to it
9. Dangote Embraces Competition
Don’t kill the competition. Competition is healthy for businesses. It keeps you the entrepreneur on your toes.
He sees competition as an opportunity to be better and do better.
10. Dangote Is a Big Dreamer but Knows the Importance of Starting Small
To build a successful business, you must start small and dream big
Any business has its early beginning which is definitely small. He encourages starting small with the hope that it gets big and better.
11. Dangote Makes Tough Decisions to Keep His Company Afloat
If I had challenges in my company, I would not hesitate to sell assets to remain afloat, to get to the better times, because it doesn’t make any sense for me to keep any assets and then suffocate the whole organization.
He is aware and knows when certain risks should be taken.
12. Dangote is Patient
You could easily tell that hard work and perseverance go hand in hand with patience. We often hear people say patience is worth it, yet we don’t practice it. I did and look how well it worked out for me.
Dear business owner, be patient. It takes time to build anything.
13. Dangote Makes Adequate Research About Business
The most dangerous thing for an entrepreneur to do is to actually go into a business that he does not understand fully.
Do not, I repeat, do not venture when you don’t understand. This is one of the facts about Dangote that I find admirable. Every business owner should do this
14. Dangote Started to Build With Ambition
If you don’t have ambition, you shouldn’t be alive.
Ambition is basically what you want from life. Dangote chose the business part and he followed through with it.
15. Dangote Knows When to Sleep
I cannot stress this enough, it’s okay to be passionate about your business but know when to sleep. Know when to rest and build the body. Dangote says:
Exercise is better than any medicine I can take; exercise and sleep.
Don’t wait until you fall sick, If the richest man in Africa prioritizes exercise and sleep, who are you not to?
Conclusion
Every single point and fact about Dangote in business can increase your process as a business owner, you just have to take what you need and make use of it.
While you are here, this is the best time to read the effective qualities every entrepreneur should have.
I wish you a successful business. Cheers to your growth!
FAQs
What is Dangote slogan?
“Building prosperity and self-sufficiency.”
What is Dangote full name?
Alhaji Aliko Dangote
How much does Dangote make in a day?
Dangote makes around 15 million a day
What is Dangote’s position in the world?
He is the richest man in the continent of Africa for 1, 2, 3…11th year. Yes, you are seeing right.
What type of company is Dangote?
Dangote is a Nigerian multinational industrial conglomerate and its position is the largest corporation in West Africa and also one of the largest in Africa.
What has Dangote done for Nigeria?
The list is quite lengthy but the most notable and world-recognized one is this; In the year 2021, Dangote (Cement sector) moved to erect the biggest cement plant in Africa in Southwest Nigeria. With this, It made Nigeria a cement exporting country.
Who gave Dangote money to start business?
His uncle; Sanusi Abdulkadir Dantata gave Dangote money to start business. Dangote was the one that actually requested the loan.
