3 Main Risks Of Becoming An Entrepreneur
(1) Financial Risks: - The risk here arises from losing the capital invested in the business. A capital can either be venture or working capital. A capital for a business is a product of cash whether the capital is building or carriable equipment or not; that is to say, a capital is the money put into business for purchase of goods and services that aid the running of a business. An entrepreneur stands the risk of losing the money either by purchasing substandard materials or by not making profit just to mention little.
(2) Career Risk: - The risk here arises from the possible difficulty in returning to former profession after resignation due to the pursuance of a new personal enterprise. It is truth that not all job has job security or satisfactory job security, but a job that an entrepreneur resigns from have been serving as a steady source of income but the new enterprise of the entrepreneur is still under probability. The entrepreneur stands a risk because success of the new enterprise not guaranteed.
(3) Personal Risk: - The extent of personal risk is so difficult to capture. The risk here involves one’s family, friends, and other associates who reaction may be harder to predict than one’s own. These external forces might turn out to be very victimizing, discouraging, pessimistic, etc. Starting a new enterprise demands the commitment of one’s energy, sacrifice of one’s leisure time, and to be candid, it entails a lot more sacrifices on the part of the entrepreneur; his or her family, friends and associates. These factors put a lot of strains on the family and other relations. The prospective entrepreneur should therefore compare his or her future life as an entrepreneur with his or her future life on his or her current job. WHO IS AN ENTREPRENEUR? An entrepreneur is a person who organizes and operates a business venture and assumes much of the associate risks. An entrepreneur is considered by most people as a meaningful risk taker. Most entrepreneurship begins as an SME (Small Medium Enterprise). An SME can be described as an enterprise that can employ either one or thirty five people; though some still consider an enterprise capable recruiting hundred people as an SME. Most SME utilizes by-products or intermediate products from larger firms. While some organizations define SME in relation to value of assets, others define it in terms of turnover and number of staff employed. Nation Council of industries defines SME as follows: Cottage industry costs excluding land not more than #1million Small scale cost excluding land but including working capital not more than #10million Medium scale with total costs excluding land but including working capital above #40million The gain of being an entrepreneur is that it gives the chance of accumulating a lot of wealth, fame, social distinction, and recognition from the use of one’s talents and energies in building a successful enterprise. The entrepreneur also stands the possibility of receiving a disproportionately high return on investment of energy, time and worry, relative to other equally talented hardworking people.