7 Deadly Risks That Can Kill Your Business

7 Deadly Risks That Can Kill Your Business

I the last article, we talked about the six ways to mitigate risks for an entrepreneur. That said, there are four categories of risks every business faces; Ignorable risks, nuisance risks, insurable risks and killer risks. However, the first three are as not as deadly as what we will be discussing here. Although the first three are manageable, in the last category we will look at the 7 deadly risks that can kill your business.

Here is a quick list of 7 deadly risks that can kill your business

  1. Financial Risks
  2. Systemic Risks
  3. People Risks
  4. Technology & Operational Risks
  5. Competitive Risks
  6. Market Risks
  7. Legal & Regulatory Risks

Let us now look at each of these 7 deadly risks that can kill your business in more details


1.      Financial Risks

Let’s start with the deadliest of them all; financial risk. What is worse for any business than running into financial problems? Almost all the other risks can be mitigated by money but with lack of finances nothing can be done. This is the highest risk any business can face and if not well handled then the end result is death of the business.

Without finances, a business can’t meet its recurrent expenditure and running costs like paying suppliers, employees, rent, insurance, statutory bills etc. It’s therefore a good idea to have a reasonable financial plan that caters for expenditure and unforeseen occurrences that can drain a company’s financial reserve. To achieve this, a company must have good financial managers or enlist the services of a financial advisor. Another strategy is in-depth audit of its financial records to see where there might be wastage, or fraud by employees.

In some cases, it’s also advisable to seek financing from investors or financial institutions when undertaking expansion so as not to drain and strain the monetary reserves that are meant for operational costs. It’s a good practice to negotiate for flexible or long-term loans with low interest rates. However, as a startup this can be very difficult and almost impossible.

2.    Systemic risks

Systemic risks are those that affect an entire industry and not just a single business entity. A good example is the effects of political tensions and instability that affect tourism. Another example is when there is an outbreak of a deadly disease that affects livestock in a particular country, region or continent. Here we are talking of something like the Bird flu, or avian influenzaH5N1 that has killed millions of poultry in a growing number of countries throughout Asia, Europe, and Africa. Others may be things like rise in fuel prices due to less production in OPEC body or adaptation of alternative sources of energy.

3.      People Risks

The peculiarity of people makes it hard to have everyone walking the same direction in a business. People will always have different opinions and preferred ways of doing things. As a result of these differences, conflicts can arise which can negatively affect the company. There are many cases where companies have lost business, incurred losses or even wound up because key stakeholders could not agree.

It’s therefore very important to have everybody who plays a minor or major role in business operations rowing on the same direction. This can be achieved by having a clear vision, mission and values that guide it. If these are not adhered to, it can lead to stagnation or falling apart of a business entity.

4.      Technology & Operational Risks

Technology is a major part of a company. Adopting the right technology or lack of it thereof can make or break a company. Failure to adopt to changing technology can lead to death of your business. A good example is Kodak. The company refused to adopt to changing technology in photography and today Kodak sounds like a name of a movie character of an ancient movie. Another example closer home is Mumias sugar company that uses obsolete technology in its operations that has led to its current woes.

The type of technology adopted also has a big impact on the operations of a company. It’s one thing to incorporate technology but it’s also another thing to adopt the right technology. The right technology improves efficiency and cuts down the cost of production.

5.      Competitive Risks

In an earlier article, we saw that no business is free from competition and even if it’s the only current player, soon a competitor will arise. As we all know competition can turn ugly because businesses will want to put others out of business with cut throat tactics. This means that you can’t afford to ignore your competitors at all.

A good example is the matatu industry in Kenya. This one of the industries where it gets really ugly and the cartels don’t help matters any better. Another industry that there is much competition is in government tenders and the mortgage industry. Land selling and property development have become some of the most lucrative businesses in Kenya today and the competition is really high.

To stay ahead of the pack, you need to come up with innovative strategies and attractive offers that will endear even the most impervious and stingy person. For example, in the land selling industry, companies are adding agribusiness packages to help investors recoup invested capital, social amenities like schools, police posts, water and electricity, all weather roads etc. conducting a SWOT analysis of your business and that of your competitors can really help you stay ahead. You also need to get and act on feedback from your customers to know what you are doing well and where you are failing.

6.      Market Risks

Market conditions can be very unpredictable. You can’t be absolutely sure that your product or service will be accepted by targeted consumers. It’s also hard to tell how the market dynamics will turn out and in most cases, they are left to follow their natural cause. It’s very hard to influence the market forces.

The best way to deal with market risks is by being flexible so that you can respond accordingly. Being rigid can cost you dearly. You need to evaluate what your consumers say about your product and react accordingly. You should always be ready to make adjustments in accordance with the feedback you get. This is very important for a new product that has yet to be tested and proven to work. Don’t think that your genius invention will be approved by the consumers because some of them might never see it’s need. Market research is very important if you want to survive this risk.

7.      Legal & Regulatory Risks

Everyone dreads getting into any form of trouble and majority of people try to be out of trouble at all costs. Some even act foolish or cowards because they don’t want to get into a confrontation as if practicing Kenny Rogers in the part where he says “Walk away from trouble if you can, Now it don’t mean you’re weak, If you turn the other cheek”.

For an entrepreneur you can’t afford running into legal and regulatory troubles. The first and most basic thing you need to do to avoid that scenario by understanding the legal and regulatory issues involved. However, this is not enough unless you are an expert in legal matters and industry regulations. For this reason, having a legal expert who is well versed in this field is very important.

The cost of hiring a lawyer especially as a startup can be very costly but well worth it if the need arises. You don’t have to hire one full time but you can hire them as a consultant on a contractual basis or when you need their services. However, a word of caution is you need an attorney or legal expert you can trust and on the other hand you need to be open with them and also not do illegal things under the table.


It’s important to know that the 7 deadly risks that can kill your business above are not the only ones you need to give attention. There are other risks that can turn out to be deadly if ignored. As an entrepreneur you need to attend to all risk factors in your business so as to always be on the safe side and maintain a smooth running of your business.