Self-employment is also accompanied by risks that can damage your company or even drive it into insolvency. It is therefore important to manage risks. This will give you a healthy basis for long-term success as a self-employed person.
Below you will find a list of risks that you should avoid at all costs:
Dependence on one customer
If you generate most of your income from a single customer, this can become a financial problem if you lose that customer. Therefore build up a broad customer base. This way, the loss of a customer is usually manageable and does not leave a large financial gap.
Unexpected back payments
Time and again entrepreneurs run into difficulties because suddenly unexpected back payments of taxes or social security contributions appear. Take precautions here and always keep an overview of the costs that will be due in the future. Your accountant or tax advisor can provide you with the necessary expertise to calculate these claims.
Lack of financial liquidity
A low account balance can quickly become a problem, rendering you, as an entrepreneur, incapable of acting and causing unnecessary costs and overdraft interest. You should therefore ensure that your business accounts are liquid so that you can pay all the necessary bills.
Stagnation in development
Each business area develops over time. As an entrepreneur, it is therefore important to adapt your own product and service portfolio to changing market conditions. In this way you remain competitive and secure your entrepreneurial future.
Payment difficulties with new customers
With new customers, payment behaviour is usually difficult to assess. For this reason, you should also be cautious with payment terms at the beginning of a new business relationship. For example, if you have a lot of external services that you have to buy for a customer job, a payment default can break your neck. As an entrepreneur, you can, for example, demand advance payments from the new customer or agree interim invoices with short payment terms.
No clearly defined framework/limits for offers
If a service description is not described in detail, it can happen that the customer wants more and more. However, due to the lack of general conditions you have no possibility to charge for the additional services. Therefore, be as detailed as possible when making offers and clearly define the extent of services.In many cases it is also important to contractually define the number of maximum coordination levels so that the coordination effort does not exceed the originally calculated offer.