An entrepreneur will in most cases decide to proceed with an opportunity despite there being risk and uncertainty. Identify and explain two (2) ways in which risk and uncertainty may change as the entrepreneur proceeds with the opportunity?
1. Risk and uncertainty may decrease:
As an entrepreneur proceeds with an opportunity, they gather more information, conduct market research, and gain a deeper understanding of the industry and target audience. This increased knowledge and insight can help mitigate and reduce risk. By continuously exploring and validating their assumptions, entrepreneurs can make more informed decisions, identify potential obstacles, and develop strategies to mitigate them. As they gain traction and build a viable business model, uncertainties related to customer demand, market competition, and overall viability of the opportunity start to decrease.
2. Risk and uncertainty may increase:
On the other hand, as the entrepreneur progresses with the opportunity, they may also encounter unforeseen challenges and risks. Scaling a business, entering new markets, or attracting additional stakeholders may expose the entrepreneur to new risks and uncertainties. For example, expanding operations to new geographies might introduce challenges related to unfamiliar regulatory environments, cultural differences, or supply chain disruptions. Moreover, increasing the size and complexity of the business can also lead to greater uncertainty about the future, especially if there are changes in the competitive landscape or new technologies emerge. In this case, the entrepreneur needs to adapt and develop strategies to manage and mitigate these emerging risks and uncertainties.