Perceived risk is the anticipation of things going wrong and losing whatever is being invested. Consumers buying a car, or a house often goes through anxiety or the feeling of uncertainty, thinking of possible scenarios where they could be wrong with their decisions. What if real estate property values decrease? What if the car doesn’t fit my needs? What if a better model comes out next year?
These perceived risks are addressed by buyers by researching and knowing more about the product. Sellers help ease the risks by offering warranties, guarantees and using known celebrities and personalities as endorsers.
Perceived risks in entrepreneurship are harder and more complex to resolve. One’s ability to manage these risks are linked to how he or she face and overcome fears. The most common perceived risks in starting a business are;
Financial Risk – Financial risks are amongst the most common entrepreneurial risks – perceived and real. There is the real risk of losing your investments, financial security, and even personal properties you put into the business. There is also the perceived risk of not earning enough, running into debt, and of losing financial security.
Common as it is, this is also the easiest risk to manage. The most seasoned entrepreneurs manage financial risks by looking for investors and partners who will share the burden of financial risks. A crash course on cash flow management is a great help in managing business finances as well as your personal finance.
Career Risk – Will starting a business bust your career? First-time entrepreneurs will keep career options open as a fallback. However, a stint in business might close that option for them. More than losing money and wasting time and effort, failing at one or more business startups will also put a black spot on your resume. You can be an expert on something – engineering, finance, or economics, but if you fail in business, it could undermine your professional credentials.
The perceived risk of losing a career due to failed businesses is relative. Some people might not see this as a risk, while others will consider it a significant one. Interestingly, it is the most entrepreneurial who don’t take this as a risk. Because for them, business is their career. Before taking the leap of faith, weight your intentions and commitment towards the new venture. I’ve always believed that those who walk the wire without a safety net are the ones who walked far.
Social Risk – Starting your own business will drastically change your lifestyle and social life. A lot of first-time entrepreneurs fear they could lose their friends, their social life, and even spending quality time with their family. While significant changes are most likely to happen, losing time or meaningful relationships is the opposite.
With the right attitude, outlook, and time management, getting into a business will give you better opportunities to socialize and build relationships with the people around you; family, friends, business associates. You are more in control of your time and schedule, giving you the freedom to spend time are you think it best.
Emotional Risk – It takes a lot of guts, determination, and emotional stability to succeed in business. You can expect a lot of physical, mental, and emotional strain in running a business. You will need to face and overcome failures, rejection, frustrations, and disappointments. And maintaining a positive outlook while going through all the challenges.
Financial catastrophe, failed business plans, losses, and rejections can easily push an emotionally unstable person to the brink. The best way to manage this perceived risk is by taking on a more positive outlook. Positivity and determination will get you far in business. Always have the abundance mentality – believing that there is enough business for everyone, you just need to work hard to get your share.
Perceived risks are in every aspect of our life. Buying properties, moving to another place, and getting into a relationship are just some life events that will give us jitters. How we manage our fears and anticipated risks in life will also be the same when getting into the business life. If we are constantly looking at the glass half-empty, we will always have those apprehensions and limitations. But, if we take life boldly, risks and all, we are surely in for an adventure.