Dealing with Startups is Risky – Learn How to Mitigate the Risks

It is no secret that dealing with startups can be quite risky. Entrepreneurs usually change the direction of their startup, there are often hidden bugs you’re not aware of, and the feature-set is rarely complete. On the flip side, startups are usually bring something new to the table and could definitely give you a competitive edge competing in the market – some help you get access to new markets, others, like Fourthwall, help you integrate various platforms together. The point is that you can’t afford to go without them. That’s why it is important to learn how to mitigate the risks instead of avoiding startups altogether.

Avoid Using Them in Mission-Critical Processes

Every company has a few processes that are absolutely critical to the functioning of the business, and bugs and issues in those processes would bring the whole company to a halt. That’s why you need to identify these processes and avoid using startups as part of these processes. Due to the higher chances of errors and bugs, you’ll expose yourself to unnecessary risk. The hardest part is identifying the critical tasks, but, generally, there are a lot of pointers you can use to identify them:

  • The backbone of your company is critical: the servers you use to host your website, the management software you use, transportation and logistics are all vital for the functioning of most businesses. That’s why you need robust, bug-free, and professional software and services taking care of these tasks.
  • Identify which tasks make your company the most money: most businesses usually have a few main sources of revenue, and they can’t afford any disruptions. That’s why it is safer to not use startups when dealing with high-revenue tasks because it can potentially lose you a lot of money.
  • Tasks related to clients: tasks directly related to clients: be it keeping their data, communicating with them, etc. are generally quite sensitive, and issues in these tasks not only will lose you money, but it might even open you up to lawsuits. That’s why it is generally not safe to gamble with these tasks.

Have Backup Plans


Having a plan B is always a smart idea – especially if you’re running a business. When using a startup for a task, you can prepare a contingency plan that you can immediately use if and when the startup fails one way or another. Your contingency plan should take into account all the tasks the startup is responsible for and be able to replace it completely. If the startup stores and manages vital data, you need to regularly back it up somewhere.

Invest in the Future Direction of the Startup

What’s the best way to ensure the startup you’re using doesn’t change directions in the future? This is a serious problem for larger companies as startups are prone to reinvent themselves multiple times during the course of their existence. You can invest in the startup in various ways to ensure they keep taking their service in a direction you like.

The primary way you can invest is monetary – most startups are strapped for cash and would welcome investment opportunities. Investing means your company will have a say in how the startup is managed, you’ll have a stake in the success of the program, and the development and maturation of the services and programs will accelerate with more access to capital.

Of course, this isn’t the only way you can invest in the startup. You can donate developer time to their opensource reps, you can offer feedback, etc.

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