Top 5 Things Every Entrepreneur Should Know About Risk Taking
It is scary to take the risk, whether going all out during a poker-friendly game or giving up your long career to pursue your promising business ideas.
Most people try to be no risk entrepreneur, because inaction is often safer than action, but most successful people will tell you where they met because they were prepared to take the risk, no one else was — whether that product was developed. Nobody else was thinking that would work or invest the amount of money that all the rest of the people were crazy about. Nevertheless, taking risks is intimidating, especially for new entrepreneurs. But it is “more complicated than doing something that can be bad.” To feel more comfortable taking risks and to make more informed risk-based decisions, keep these five considerations in mind.
1. It is necessary to take risk
Before venturing into the world of business, one must first say goodbye to a salaried job and, in some cases, to one’s career. Some people have the luxury of Plan B to resume their careers, if things are not going well, but it is not valid for everyone. For most start-ups, there is no guarantee of personal income, especially for the first few months and years of their business. Some entrepreneurs are able to undertake their projects, relying only on external financing. This usually means contributions from angels, grants and government loans, as well as crowdfunding campaigns of crowdfunding. However, many entrepreneurs need to tap on their own bank accounts and personal savings with which to start. There are also risks associated with being an entrepreneur, and one must be aware of them before the entrepreneur decides to travel on the road.
2. Risk can be calculated
When taking a major risk, it is important to calculate potential outcomes and have contingency plans in place. Although entrepreneurs’ success stories bear the ‘ultimate’ risk, there is no single risk that affects your business as a whole.
3. Some of your risks won’t pay off.
An optimistic risk taker always sees things as half or full; a 50 percent rate of success is “very good prospects” and a 75 percent rate of success is a “sure thing”. It is complicated by the cultural idea that becoming a no risk entrepreneur is usually a rewarding strategy. However, one will not be fooled by thinking that all risks are good risks or that always taking a risky option will pay off. Some risks, even carefully calculated, will fail. Instead of ignoring this fact to embrace your apprehension of risk, embrace it. Accept the possibility of failure yourself, and when you fail, do not take it personally — learn from the experience and move on.
4. Helps differentiate between risk leaders and followers
Typically, entrepreneurs take risks because it allows them to differentiate themselves from their competitors. Competitive business environments still exist today, which seek to put themselves in positions of risk as leaders, while others are left behind. If you take a minute to think of a leader you consider successful, chances are they changed the way things were done better and put themselves in line during the process. This does not mean that all leaders take huge risks on a regular basis, but it is safe to say that all leaders have taken at least one risk in their careers that has helped them regain their current status.
5. There is no innovation without risk
Innovation cannot occur unless there is an element of risk to begin with. Whether it is a new product or a change in existing practices — both of these will be considered risks. T. s. Eliot said, “Only those who risk going too far can possibly find out how far it is possible to go”. When innovating, the level of risk can be reduced by ensuring that all possible calculations have been done to evaluate whether it is the best option.
6. This is a chance to learn
Without risk, entrepreneurs will not experience failure and therefore will not learn from their mistakes. Of course, it is possible to learn from positive experiences as well, however, failure teaches us a very powerful lesson that wants to be with us for life. Furthermore, risk taking teaches us important skills such as calculating contingencies as well as strategic thinking and planning.
Hopefully, these facts have replaced their perceptions of “risk” as a general concept, even if only slightly. It takes time to get to know the complexities and nature of the risks, and even more time to get comfortable taking them, but eventually it will become second nature to you. Focus on known factors when you can, accept ambiguities — and realize that failure is never the end of the road.