The internet has opened up new opportunities and lowered the barriers to entry in almost every industry. But it has also given more entrepreneurs the chance to be bold and take risks. Knowing how to embrace certain risks while avoiding potentially costly ones is integral to maximizing success.
As an internet entrepreneur in 2019 and beyond, you face a unique set of risks. And just as any business needs a risk management strategy, you need to develop your own approach to understanding and neutralizing threats. In particular, you must be aware of the following:
We live in a litigious society where lawsuits are filed with shocking frivolity and without apology. This has led to a vicious cycle where restrictions are put in place to avoid lawsuits; lawsuits are filed when restrictive rules aren’t in place, and more restrictive rules are created in the wake of lawsuits. Lawsuits feed restrictions and restrictions feed lawsuits. As an internet entrepreneur, you don’t have to agree with the litigious nature of today’s consumer marketplace, but you do have to respect it. Whether you sell physical products, a service, or advice, understand that you can be sued for virtually anything and make a small investment in defences that will help you survive a lawsuit.
Small business owners and entrepreneurs know that cyber attacks happen, but generally, assume that hackers focus their efforts on large businesses and corporations that are worth billions of dollars. However, this isn’t true. The reality is that hackers prefer to target smaller businesses because they’re more likely to be unprotected and vulnerable to simple attacks. They view smaller internet companies and websites as easy prey and can execute a well-coordinated attack before you even recognize what’s happening. Hackers who victimize your website can wreak havoc on your venture – leaving you with issues like Malware, Ransomware, Data theft and Content hijacking.
Most entrepreneurs misunderstand the idea of competition and, in one way or another, it comes back to bite them. Contrary to popular belief, you don’t want to start a business in an industry where there is no competition. This typically indicates there’s no market for whatever it is you’re trying to sell. And unless you have deep pockets and lots of time, you simply won’t be able to educate people on why they need your product and then convince them to buy. On the flip side of things, you don’t want to start a business in a niche where there are already two or three businesses with double-digit market shares. This indicates that the marketplace is already locked up and you’ll face an uphill battle trying to break in. What you want is a niche where there’s already some competition, but it’s spread out across a handful of different businesses. This indicates that there’s demand for the product, as well as an opportunity to become one of the market leaders. Competition is good – but there’s a sweet spot. Keep this in mind and don’t get involved with an industry where your potential is stunted from the start.
When physical products get ripped off, it’s fairly easy to step in and do something about it. But when you’re selling a service or education, rip-off brands can really put a dent in your profits and pull customers away from your business. In an online world where you put your products and services out there for the world to see, there’s always the risk that someone could come in and steal your product or service. The best way to avoid this is by (a) filing for all of the proper trademarks and patents, and (b) creating such a magnetic brand that it’s impossible for another company to come in and take your customers away without first creating an equally powerful brand of their own.
You probably view social media as a business asset, but this isn’t always the case. Whether you realize it or not, social media can actually introduce your business to numerous risks and challenges. In terms of branding and reputation management, today’s online businesses face serious risks at the hands of social media. One ill-worded tweet or poorly timed Facebook post can lead to negative backlash and serious consequences in the court of public opinion. The best thing you can do is create very strict rules and processes around what can be posted, who can post, and how content is reviewed, edited and revised prior to posting. A strict social media policy is necessary for even the smallest, one-man operations.