10 Risks Every Small Business Founder Should Be Aware Of
At this month’s virtual mastermind session, members came together to explore one of the most critical topics for business leaders: risk.
Led by experienced advisor and coach, David Haimes, the discussion highlighted several pitfalls that can derail even the most promising business if left unmanaged, and some key mitigation strategies to get ahead.
Consider this a crash course in the risks many businesses face, while recognising that each founder’s circumstances are unique.
10 key risks every small business founder needs to plan for:
1) Cash Flow
Arguably the biggest risk for SMEs. Many businesses don’t fail because they’re unprofitable, but because they run out of cash. Late payments, poor forecasting, and overstretched resources can all tip a business into crisis.
Mitigation: Put strict payment terms in place, follow up immediately on late invoices, and keep forecasts up to date.
2) Working Capital
Without enough working capital, businesses can quickly find themselves exposed. Relying too heavily on reserves or credit puts a strain on stability.
Mitigation: Structure deals so clients fund your working capital wherever possible and implement clear payment terms that suit your business.
3) Reputation & PR
For B2C businesses especially, reputation is everything. One negative headline, social media storm, or unresolved complaint can cause disproportionate financial damage.
Mitigation: Proactively manage issues, respond quickly to complaints, and protect your brand image.
4) Concentration Risk
When too much revenue is generated by one customer or a few key clients, businesses become fragile. A single change can dramatically impact cash flow.
Mitigation: Diversify your customer base and revenue streams where possible.
5) Competition
The market moves fast. Ignoring competitors or being slow to adapt can result in sudden loss of market share.
Mitigation: Keep a close eye on your industry and learn from others’ successes and mistakes.
6) Founder Relationships
Tensions between co-founders can paralyse operations. Without the right structures in place, disagreements can escalate and damage the business.
Mitigation: Use shareholder agreements early on to formalise commitments and reduce fallout.
7) Knowledge Concentration
If critical expertise sits with just one person, delivery and continuity are always at risk. The business becomes dependent on that individual.
Mitigation: Spread knowledge across the team and put systems in place to diversify expertise.
8) Founder Burnout
The demands of running a business can take a serious toll. Burnout doesn’t just affect the founder – it can destabilise the entire company.
Mitigation: Delegate to trusted team members and prioritise sustainable working practices.
9) Personal Brand
In the early days, clients often buy into the founder more than the business itself. Your personal reputation can make or break opportunities.
Mitigation: Invest in building credibility, visibility, and trust in your personal brand.
10) Perception & Trust
How your business is perceived influences who wants to work with you. Sometimes “acting bigger” than you are can build the confidence clients need.
Mitigation: Focus on building trust as intentionally as you build revenue.
Final Thoughts
This session was a reminder that while risk is unavoidable, it can, and should, be managed. For founders and CEOs, effective management of cash flow and business reputation will always be the two most powerful levers for sustainable growth, but not the only threats to prepare for!
If you’d like to be part of these valuable conversations – and gain fresh, founder-to-founder insights every month – click here to find out more about All Together’s memberships.
