what are the financial risks that are involved in a business?

Answer 1

In the US most start up businesses fail. You should have enough money to live on for 3 years. If you are lucky the first year you will lose money, the second you will break even and the third you will start making money.

Other costs include a business license, business insurance, a business telephone number, opening a bank account, office supplies, and advertising. If you are going to open a storefront, you will need to pay rent and utilities.

The last thing people think of, but what should be the first, is getting yourself an accountant. You should discuss your plans and decide if the accountant will do your books and taxes or just your taxes or just train you to do it.

Running your own business is hard work. If you have your doors open 8 hours a day, you may need another 3 to do your bookkeeping, ordering supplies, and otherwise managing the business.

There are some small business classes offered for free. Check with your local college or county office.

I hope this helps. Good luck.

Answer 2

Financial risk the risk due to the leverage used by the company. It is caluclated by he degree of financial leverage which is change in Net Income to change in Earnings before interest and taxes.