Strategic Evaluation of Risks in Business Start-Ups: Case Study

This report explores the various risks faced by business start-ups, emphasizing the importance of strategic evaluation and mitigation. It identifies risks related to capabilities, development, design, economy, funding, technology, market dynamics, finance, strategy, reputation, and liability. The report uses the example of Gousto, a British meal kit company, to illustrate these risks and the strategies employed to manage them. Through secondary research, the report consolidates different perspectives on risk, highlighting the significance of addressing financial, market, and technological challenges with proactive and diversified strategies. The conclusion underscores the necessity for start-ups to continuously evaluate and adapt to changing market trends and competition, recommending a proactive approach to risk management for sustained business growth. Desklib provides access to similar solved assignments and study tools for students.

Risks in business start up

Contents
INTRODUCTION...........................................................................................................................1
AIMS AND OBJECTIVES ............................................................................................................1
SEARCH TECHNIQUES AND RESULTS ...................................................................................1
LITERATURE REVIEW ...............................................................................................................2
RESULTS OF REVIEWS...............................................................................................................3
CONCLUSION................................................................................................................................4
RECOMMENDATIONS ................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Business start-up can be defined as an organisations which is at the initial phase of its
development. Its main purpose is to bring a unique product or service to market in order to gain
competitive advantage (Teberga and Oliva, 2018). In a business start-up, risks are integral as
well as inevitable in nature. While risks cannot be always eliminated or mitigated, it is
significant for entrepreneurs and managers to have knowledge associated to their risk mitigating
strategies in an effective manner. In order to better understand the risks present in market,
examples of Gousto company is taken into consideration. It is a British company which offers
meal kit, ready-measured food with recipes. It was founded in 2012 and has its headquarters at
London, United Kingdom.
This project report demonstrates an understanding of risks associated with business start-
up in a strategic manner. In start-up businesses, entrepreneurs can come into contact with varied
risk in relevance with legislations, operational security and financial aspects. Risk taking is
concerned as a essential part of business strategies which evaluates how a business decision can
benefit or harm the organisation.
AIMS AND OBJECTIVES
This project report is aimed to explore varied risks which are faced by business start-ups
in operating their operations in a strategic manner. This report principally focused on differential
risk and their evaluation in a critical manner.
SEARCH TECHNIQUES AND RESULTS
A researcher can use varied search techniques which are essential for them to extract and
assimilate the information from differential sources in an effective manner (Galvão and Et. Al.,
2019). They majorly use techniques in regards with primary and secondary data techniques for
effective evaluation of their data sets. In this specified report, secondary data extracting
technique is used. Data is collected through assessing secondary data sources such as journals
and books. Results of this report will be drawn on the basis of choosing a reliable source and
making valid points in an effective manner.
1

LITERATURE REVIEW
As per Lettich (2021), entrepreneurs face varied risks while planing to establish their
businesses as they have to operate in a dynamic as well as competitive environment (Lettich,
2021) These risk are essentially related with capabilities, development, design, economy,
funding and maintenance aspects. For example, managers of Gousto face technological issues at
the time of global pandemic when their sales has risen up in a significant manner. In order to
solve that they have developed a PagerDuty which is a sort of information technology
administrator enables them to centralise their monitoring activities in a strategic manner.
Through adoption of automated software managers of Gousto are performing through enhanced
distributed ways in regards with working.
As per York (2020), business startups face varied risks concerning the execution,
technology and market components in a strategic manner (York, 2020). Execution risk arises
when businesses are failed in aligning the vision and objectives of an organisation. It is
imperative for entrepreneurs to scale up their operations by formulating proper strategies in an
effective manner. Strategies can be formulated by entrepreneur but its execution in proper and
systematic manner is important. For example, at initial stages of development, managers of
Gousto have formulated their strategies in regards with marketing of their products and services
but their employees were unable to formulate them in an effective manner which led to
disruptions in their productivity. It is crucial for business start-ups to nail their foundational
execution which assist them in levelling their growth in an effective manner.
Technology risk is also common in the era of digitalisation as business start-ups are
largely concerned with using advanced technologies in a significant manner (Bhimani, 2022).
These can impact the business operations in regards with missed deadlines, cyber attacks as well
as staff departures in a strategic manner. It tricky for business start-ups to adopt technological
aspects in order to cater the demands of customers. It becomes critical for organisations to
deliver value proposition as well as produce differentiated products by adopting technology. For
example, Gousto whose major business operations are based on the use of technology that is
artificial intelligence and e-commerce aspects. They can face risks in this regard if their system
gets crashed or hijacked by cyber criminals.
Another important risk for start-ups is market one which can take numerous forms and
entrepreneurs can not control it. Varied aspects in relevance with market risk are stock market
2

performance, fluctuating currency values, increased job growth rates as well as global pandemic
which needs to be undertaken by entrepreneurs for running their operations on a smooth basis.
Market dynamics are never sets still as they are fluctuating in significant manner. It is imperative
for entrepreneurs to measure their market dynamics as well as competitive performance in order
to gain success as well as plan for expanding. For example, entrepreneurs of Gousto has faced
market risk due to dynamic trends as well as changing needs and perspectives of people.
As per Rowe (2020), risk of business start-ups are concerned with finance, strategy,
reputation and liability aspects (Rowe, 2020). Numerous businesses face financial risk as they
have to plan for their investment and they also have low cash flow at the time of corporation of
their enterprise. Serious recession period like global pandemic also needs to be considered by
entrepreneurs so that they can develop strategies for mitigating this risk. Newly formed business
start-ups who do not have a specified and systematic decision-making process can face strategic
risks which curb them in executing the prescribed strategies in an effective manner. Business
start-ups can face risk of deteriorating their reputation in market which led to decrease in the
number of their customers.
It is imperative for entrepreneurs to take care of this risk as this can be address smoothly
through the use of social media platforms and digital channels in an adequate manner (Wallace
and Webber, 2017). For example, entrepreneurs of Gousto face risk in context with maintaining
their reputation as they operate through digitalised practice. Negligence of customer reviews and
feedbacks can act as a threat which led them to face reputation risk in a significant manner. In
order to mitigate this risk, they can adopt a social media policy through which they can
communicate with their customers as well as employees in an effective manner.
RESULTS OF REVIEWS
As per the above analysis of varied literature which is assimilated through secondary
research components, differential authors are have their own definition and types of risk.
However, they are conglomerate in a significant manner and needs to be evaluated on a critical
basis in order to mitigate them. Business start-ups face differential range of risks throughout their
operations which needs to be mitigated through proper strategies. Most familiar risk which are
faced by start-up businesses are concerned with financial, market and technological aspects. It
has critically evaluated that these risks can be mitigated through effective strategies (Macdonald
and Et. Al., 2018). For example, for mitigating the technology risk, entrepreneurs of Gousto have
3

developed their website in such a way that they can cater the needs of their varied customers on a
consistent basis.
CONCLUSION
From the above mentioned information, it has been concluded that business houses face
varied risks in respect to technology, capabilities, legislations and many more. Researchers use
varied kinds of search techniques in order to assimilate their data sets in a strategic manner.
Technological, market and execution risks needs to be taken care in an effective manner as this
can disrupt their business operations. It is needed for entrepreneurs to diversify their operations
as well as take necessary steps for executing their strategies which aid them in improvising their
productivity in a significant manner.
RECOMMENDATIONS
It has been recommended to managers of business start-up to evaluate varied risks
aligning with their operations and industry. It is imperative for them to ascertain these risks
which help them in framing the strategies in an effective manner. Business start-up face risk in
regards with technology but that does not mean that they can be stopped for bringing innovations
in a strategic manner. It is desirable to entrepreneurs to formulate strategies for mitigating these
risks irrespective of stopping their business operations. It is imperative for entrepreneurs to
investigate in an effective manner in accordance with the changing trends of market, intense
competition and dynamic trends. It is advisable to entrepreneurs to have an proactive approach
rather than inactive one which help them to frame strategies for mitigating the risks in a strategic
manner. It is recommended to entrepreneurs to research as well as plan in an effective manner in
order to mitigate the strategic risks.
4

REFERENCES
Books and Journals:
Bhimani, A., 2022. Financial Management for Technology Start-Ups: How to Power Growth,
Track Performance and Drive Innovation. Kogan Page Publishers.
Galvão, A. and Et. Al., 2019. The role of start-up incubators in cooperation networks from the
perspective of resource dependence and interlocking directorates. Management
Decision. 57(10). pp.2816-2836.
Macdonald, J. R. and Et. Al., 2018. Supply chain risk and resilience: theory building through
structured experiments and simulation. International Journal of Production
Research. 56(12). pp.4337-4355.
Teberga, P. M. F. and Oliva, F. L., 2018. Identification, analysis and treatment of risks in the
introduction of new technologies by start-ups. Benchmarking: An International Journal.
Wallace, M. and Webber, L., 2017. The disaster recovery handbook: A step-by-step plan to
ensure business continuity and protect vital operations, facilities, and assets. Amacom.
Online:
Lettich T., 2021. 14 Startup Risks Entrepreneurs Should Consider When Launching their
Startup.[Online]. Available through: <https://fundingsage.com/14-startup-risks-
entrepreneurs-should-consider/>
Rowe. C., 2020. The 6 Biggest Risks Concerning Small Businesses. [Online] Available through:
<https://www.clearrisk.com/risk-management-blog/bid/47419/the-6-biggest-risks-
concerning-small-businesses>
York K., 2020. 3 Types of Business Risk for Startups. [Online] Available through:
<https://york.ie/blog/three-types-of-business-risk-for-startups/>
5