Risk Identification as Important Foundation to Build Startups

Written by Student Reporter, Deo Fernando (Entrepreneurship 2021)

In developing a business, a lot of risks that might occur. These risks can have an impact on the decline in income, bankruptcy, and the dissolution of a company. Talking about risks, the Dean of SBM ITB, Prof. Dr. Ir. Sudarso Kaderi Wiryono, DEA gave a lecture to Bachelor of Entrepreneurship program students.

Prof. Sudarso first defined risk as something that cannot be achieved or miss other values of an organization. For this reason, these risks can be avoided or minimized. He further emphasized the risks that might occurs in businesses startup. Risk analysis for startups is different from established companies, this is because established companies have data that can be processed for future forecasting so that risk can be minimized, unlike startup companies. When talking about startup, there are three types of risks a startup usually face: market risk, financial risk, and operational risk. “If you want to build your own business, you should start with the market.”, Prof. Sudarso said.

He added that startup companies must define their markets first when starting a business. The market occupies the top position in the most important thing that must be owned by the company. This factor is very risky considering that lot of startups are closed because the products or services they offer are not needed by the market. 

Besides, the product or service offered must be by following the target market that we are targeting, not targeting all markets. “If you start your business that is multiple products it is interesting but not focuses, you should run your business in a specific market”, Prof. Sudarso added.

Furthermore, the risks that related to financial matters that includes how to set prices (pricing method) or strategies for obtaining funding. In setting prices we might could not set it directly, but we also have to consider the market that will buy our products, then specifically for startups in the funding strategy, which is recommended is through investment. This investment channel has a smaller risk compared to bank’s loan. Because startup’s income is exponential in the sense that first, the startup loses first and then earns a lot of profit. If funding from the bank’s  loan then the company will be overwhelmed in interest payments and high risk of bankruptcy.

In operational matters, the risk that can be obtained is an ineffective operational system. This can result in higher costs and lower profits. We also need to effectively measure the required RnD costs and other costs that will later be adjusted to the sales price.                               

In the last session of the course, Prof. Sudarso asked students to analyze the risks that might occur in startups that they are developing as a student in Bachelor of Entrepreneurship program.