Most Common Startup Risks and How to Manage Them

Upsilon
2 min readFeb 15, 2024

Planning on launching a new startup and want to be ready for all of the challenges that the business world has in stock for you?

The risk management plan is key to the 10% of startups that didn’t fail and are successfully operating. The risks that the startups face all the time are pretty similar, so having a game plan for their mitigation will definitely come in handy.

Do different businesses face similar risks?

The likelihood and the impact of the same risks may be different across different industries. Nonetheless, these 🔟 occur commonly:

🟡 Market risks
🟡 MVP and product quality
🟡 Team risks
🟡 Financial risks
🟡 Legal risks
🟡 Technical risks
🟡 Sales and marketing risks
🟡 Pivoting risks
🟡 Reputational risks
🟡 Exit risks

Even with brilliant go-to-market and sales strategy plans, failing the other core basis of risks would be a bummer. So, how can you tackle these?

Establishing the Risk Management Framework:

Use the market-tested strategies to mitigate the risks and set up a functional alarm system:

✍️ Identify risks: determine which risk factors are relevant to your specific startup.

✍️ Assess the likelihood and impact: evaluate all the possible “What ifs” and assess the potential losses.

✍️ Prioritize the risks: sort the challenges according to their probability, impact on your company, and the level of control you have over them.

✍️ Develop a risk management plan: define your strategy for risk management. Are you planning to avoid the problems, reduce their impact, toss it to a third party, or take the fight?

✍️ Implement the risk management plan: make sure every member of the risk management plan properly knows their responsibilities and action plans during emergencies.

✍️ Monitor, review, and update: constantly make sure that your emergency plan is relevant and functional, and that every moving thing is well-oiled and ready to run.

Even if you think that the development of your product, setting up efficient marketing, or working with customer feedback is more important right now, the risk management plan for other vulnerable areas is something that better be unused than nonexistent when disaster strikes.

This was a brief rundown, of course. Keep reading to find more actionable tips and tricks ↓

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Upsilon

Digital product studio. We help early-stage startups (<$100K) and scaleups ($1M+) grow faster by creating products that drive results.