• Learning for LifeandWork

Risks that an entrepreneur may face when they start their own business.

When a business fails the entrepreneur may lose money, have to pay back money borrowed, have difficulty finding another job and have low self-esteem and low self-confidence because of the failure.


It is not unusual for a business to experience failures and when there are risks involved, these risks can either go well or they can fail. Some reasons why a business may fail include:


Poor cash flow - the entrepreneur may experience difficulty with cash-flow in the

business and this could put the business at risk


Lack of expertise - the entrepreneur may not be expert in all areas of the business and thus

could end up losing all their investment


Lack of experience - the entrepreneur may be young and inexperienced to take on the

responsibility that is required of them and therefore the business may

never get off the ground


More time and effort required than expected - the entrepreneur may find that running their business is taking up a lot of their time and on account of this, time with family and social

occasions may be pushed into the background.


Other reasons for failure may include:

  • Too much competition for the same product

  • A lack of customer demand

  • A poor economic climate

  • Poor market research carried out by the business

  • Failure to manage and keep control of the business if it grows very quickly


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