Identifying potential business risks for entrepreneurs  

Entrepreneurs inevitably encounter challenges, but it is possible to substantially reduce or even eliminate business risk. 

To identify potential business risks, one of the most effective approaches is to write down all the problems that could potentially impact your business. A highly recommended tool for this is a SWOT analysis. Conducting a SWOT analysis allows for a more thorough examination of the pros and cons, enabling you to better identify potential business risks. 

To conduct a SWOT analysis effectively, it is essential to follow a structured approach. The first step is to evaluate the strengths of your business and identify areas where it excels. Subsequently, you need to determine the weaknesses that could potentially harm your business. Once these internal factors have been assessed, it is crucial to explore the external environment for opportunities that can be capitalized on. Lastly, it is important to anticipate any potential threats that may pose challenges to the business. 

By actively following these steps, you will be able to identify and understand the risks that your business may encounter. 

Alternate methods to identify business risks 

It is important to keep in mind that there are many ways to identify risks in your business and it is important to explore various types to see which ones suit you best. According to one entrepreneur from Armenia told us during a series of interviews “People in business love to get options”. 

Here are several alternative approaches you can use to recognise business risks: 

Early Warning Systems: This is a way to implement clear, easy-to-follow processes to monitor key performance indicators and notify you when they change. 

Using a Decision Tree diagram: This is a way to layout all possible outcomes for a decision to help pick the best option to minimise risk. 

For a more advanced way to identify business risks for experienced entrepreneurs, we recommend you try a Fishbone diagram – it’s a way to find the root of a problem. 

Be creative while identifying business risks 

Be creative, combine various tools as in reality neither of them is self-sufficient on its own. Find the right combination for your business and your team. 

Based on the structure of your business and the character of your team you might want to try out and implement some of the following techniques:  

Risk Assessment Workshops: Where you gather your team or just key stakeholders to converse about risks with an upcoming project or task and prioritise them based on importance and impact. 

Scenario Analysis:  A way of assessing the outcome of future events to get a wide array of outcomes. 

Brainstorming: Where you gather a team to input their own individual ideas on a subject or question.