Six Unexpected Risks to Your Start-Up Business to Protect Against


We all know that the world of business can be as cut-throat as it is cutting edge. There’s something Darwinian about launching a small business with tight margins into the world, hoping for its survival. And the statistics aren’t favorable, with the majority of small business enterprises failing to make it past the one year mark. If you know what your customer wants inside out, and have produced a healthy product or service to answer that need clearly, that’s one thing. But there are myriad other risks you need to protect your small business from out there: 

Digital & Data 

You can’t see it, but this could just be the most significant intangible threat out there, for a company of any size. Small businesses can be especially vulnerable as they tend to lack an adequately resourced IT department or even necessary internet security in many cases. This leaves them wide open to the growing threat from hackers and cybercriminals. As you’ll be dealing with customer data, you must invest in security measures, as breaching data protection can lead to crippling fines. It’s a good idea to look at Cyber Liability Insurance, which can help protect your business from virtual danger. 

Suppliers & Risk 

Even if your own house is in order, your business can still be at risk if exposed to a dangerous supply chain. If you rely on multiple third-party companies to supply critical components to your business, and disruption to that relationship can have disastrous consequences. Use contingency planning wisely, but in this global age, it can be far out of your control if a supplier goes into Voluntary Liquidation, Make sure you put a proper risk management strategy in place from the beginning, including prevention measures and training. 

Legals & Contracts 

Setting up in a brand new business, you may be extremely good at what you do, but not necessarily so good at the ins and outs of contract law. In those early days, you will be signing a lot of legal documents, and may not have time to properly evaluate everything – which can sting you further down the line. You could be exposing yourself and your business to unnecessary risk passed on from suppliers or customers. When not a lot of profit is rolling in yet, don’t be tempted to trim down on costs by cutting back on qualified legal advice. Try and think long-term and realize that what you’re laying out now will pay you back in savings on legal costs and insurance further down the line.

Your Employees 

Although many small enterprises start off as a sole trader or partnership, if the business becomes successful the first thing you need to do is recruit staff. And each new person your company takes on presents an additional unknown risk factor. The most prominent threat is lawsuits, at any stage in the interview process and by former and current employees. Even if there are no grounds to the claim, and you are the best boss you can be, defending a legal action is hugely expensive and time-consuming. Make sure you benefit from competent Human Resources advice at every stage of the process, and again, look into specific Liabilities Insurance for employers which can protect against a lot of complications. 

Replacing Staff 

A frequent problem for small operations in the early stages is that they rely heavily on the expertise, talents and hard work of very few individuals. What happens if that person gets sick or leaves? Would parts of your business be completely unable to function? You need to consider how to protect revenue streams, how to maintain operations and also how you might fund a temporary replacement if needs be? Although this risk is a hard one to avoid when you’re running a lean start-up, there are policies available to reduce the risk and provide some financial continuity at what may already be an extremely stressful time. 

Safeguarding Your Property 

If your business has property holdings, they can be a significant vulnerability and will need a risk management plan developing. Have a complete inventory done of all assets. This will inform the level of risk you have, and how much coverage will be required. Property coverage insurance will cover your replacement costs in the event of theft or damage and provide a cash value for the property itself. 

Optimism may be an essential ingredient for launching a business in today’s crowded marketplace, but make sure you think in terms of a worst case scenario when it comes to protecting the interests of your business – you’ll be glad you did if the worst happens.





I hope you enjoyed this article about unexpected risks to your lean startup that you need to protect yourself from.

Interested in more articles about running a startup?

Read My Posts:

- How To Navigate Your First Year As A Lean Startup

- Fake It Until You Make It While Finding Your Business Niche

Published by Michael J Schiemer
Owner of Bootstrap Business
Money - Marketing - Motivation
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Mike Schiemer Builds Better Business

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