What risks are involved in starting a business? | FAQs

BUSINESS & MANAGEMENT   |   3 minutes  |   November 30, 2016

Are you thinking of starting a business but worried about the risks involved?

In this 1 minute video Gareth Cotten, Head Tutor for the University of Cape Town Start and Manage a Small Business online short course, elucidates on the risks you might face when you start a business and suggests how to avoid them.

The risks you face when starting a business can be grouped into two types: financial and time-related risks. To evade financial risks, you could start a business that doesn’t involve a lot of start-up capital. However, if a business doesn’t require a lot of capital it could require a lot of care, and vice versa.


The risk when starting a business are generally going to be two types of risks. The first type is going to be a financial risk, the other one is going to be a time risk. Some businesses require a lot of capital, they require a lot of start-up funds, others require very little or even nothing. So if you want to lower your risks, I would recommend starting a business that doesn’t require a lot of capital up front. Having said that, if a business doesn’t require a lot of capital it probably is going to need a lot of time and a lot of care. So there is a risk with any business that you can insert and use up a lot of your own free time. It can start to impact on your personal life as well and it might not work out, so that is the time risk of starting a business. Having said, one of the benefits of having a good business is that it can help you free up time. So once you have developed the business to a point where you can actually pay for your expenses and your lifestyle -you no longer have to be clocking in at given hours or be somewhere at a specific time – that business can actually help you free up time and give you more flexibility in your life.