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The Uber Case Study in Small Business Risk

Small Business RiskUber’s rise to prominence may be one of the most sensational small business success stories in recent years. The company virtually came out of nowhere, disrupted a well-established industry, and racked up a $40 billion valuation in late 2014.

Despite Uber’s success – and the fact that many people will undoubtedly be using Uber’s car sharing service as the holiday festivities conclude with New Year’s Eve – the company has faced a number of challenges in recent weeks. Cities across the world, including New Delhi, San Francisco, Los Angeles, and Portland, have either sued the company or have forced the company to suspend operations for various reasons. Most recently, South Korea indicted Uber’s CEO for allegedly violating a public-transport law.

These are just a few of the headwinds that the company has faced during its ascension to ubiquity. There are surely many other challenges that the company faces as it scales for its rapid growth, but these are just a few of the more commonly cited and well-publicized challenges facing the company.

What does this have to do with small business growth, you might ask? It has a lot to do with it. First of all, it’s a good reminder of how even the most successful startups and small businesses face obstacles beyond their control. Secondly, it illustrates the sort of price that many entrepreneurs and startups have to pay for being an innovative industry disruptor that challenges the viability of established incumbents. Finally, it also raises the question of how these regulatory risks will affect the company’s valuation in coming months and years.

It will be interesting to see what the New Year brings for Uber and how the company will navigate the challenges they are facing. They seem to be handling it well so far, but there are a lot of incumbents with a lot to lose by Uber’s success, so it is safe to assume that the industry will continue to fight Uber’s innovations and disruptions to the industry. In the meantime, it appears that consumers are voting for Uber’s success with their pocketbooks.

How do you think these regulatory challenges will affect Uber? What are some of the similar challenges and small business lessons that you and other small business owners commonly face?

Vote in our survey or share your comments below. In the meantime, have a safe and Happy New Year – and here’s to a successful and prosperous 2015!

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