Risks and Rewards of the
Entrepreneur
Risks of Entrepreneurship
Intstuctor:
Michael Karl M. Barnuevo, MBA MICB
No Steady Paycheck Sacrificing Personal Capital
•If you are an entrepreneur, this means that •A lot of times entrepreneurs have to use their
you will often have to give up the security of a own savings to get their business off the
steady salary at the end of the month. ground until they have developed it enough to
be ready for external funding from angel
•This means that if your business is not doing investors, government grants, loans or
so well, it can have a serious effect on your crowdfunding campaigns.
personal income. •If you are not planning to take investment or
look for funding, the strain on your savings
can be even larger.
Relying on Cash Flow Interest in Your Product/Service
•It can be a real challenge to secure enough •Even with a lot of research and tests, you only
cash flow in your business on an ongoing have an estimate of people’s interest in your
basis. product/service, and that interest is somewhat
•This is particularly true if one of your bigger unpredictable.
clients pays late or you lose a client, then • This means that your financial projections can
costs can quickly exceed your revenues and be flawed, which can have major effects on
you will need to tap into savings to pay the your business.
bills
Trusting Key Employees Betting on a Crucial Deadline
•If you are starting your business, you won’t •Finances are often tight in a start-up and
have the resources to hire a full team, which investors want to see progress, which means
means you will have a small group of people that several milestones can be tied to a
putting a lot of effort into the product to get it certain deadline.
going. •This means that entrepreneurs regularly have
•This means that you will have to put a lot of to worry about hitting a specific deadline and
trust in this small group of people to get the need to make sure to have a follow up plan if
job done, otherwise your timeline can be it does not work out.
completely wrong.
Committing Personal Time (and Health) Emotional Risk
•You will spend countless hours working on • Starting a business will mean that you will go through an
your business to make it successful, which will emotional rollercoaster – you may feel others had it easier to start
make you miss out on personal time. with, there might be jealousy of a competitor who got into press,
romantic difficulties because you are spending so much time on
•Often entrepreneurs end up sacrificing their the business, self-doubt, problems with time management and not
health by not sleeping enough, being under enough time to see your family and friends, feeling of rejection by
constant stress and eating unhealthy foods. investors, press, etc., or problems with your fellow co-founders or
employees.
• It can also be a large burden to be responsible for the business all
by yourself, which can be scary and lead to feelings of loneliness.
Risk of Scaling
•As your business is growing, a new set of
challenges will be awaiting you, spanning from
hiring more employees, opening another
office, technical upgrades, launching a new
product to acquiring another business.
•There are a lot of pitfalls on the way so you Rewards of Entrepreneurship
need a strong support network and a team
you can trust to help you with these
challenges.
Control Excitement
•A major benefit of starting you own venture is •Building your own business can be a very exciting
that you have a large degree of agency and and highly enjoyable process as you get to apply
your skills and abilities to solve problems, make
control of what is happening in your company. fascinating breakthroughs and meet interesting
•You can decide whom you want in your team people.
and you set the vision for the company and •Your work is dynamic, as the company constantly
make strategic decisions. needs to adapt as it is growing so you never get
bored. There is no better feeling then creating
something out of nothing, and you get to work with
people who are not only your customers/suppliers,
but also your friends.
Flexibility Rational Salary
•Because you own the company, you can •Another advantage is that your salary is
decide how to organize your schedule and directly related to how much work you put in
when to take time off, but the truth is that and how many new contracts you close.
entrepreneurs often have to work very long •Over are the days where you put in so much
hours, particularly in the beginning. more effort than your co-worker but get paid
the same and you also don’t need to wait for a
raise anymore.
Impact
•You get to see the impact you make first hand
as you work closely with your customers and
the problems you solve make a real difference
in people’s lives.
•Furthermore, you create jobs which will attract
talent to your local area and also helps
economic development.
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Activity
Thank You
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