Most successful businesses are built on a foundation of well calculated risks which paid off to benefit the companies growth. Whilst it is often encouraged to take risks in order to reap rewards, it is crucial to consider ways in which you can make risks manageable. The following points should be your go to platoform for advice prior to taking any huge risks, these suggestions arent fool proof but they can insure that you protect yourself from large unwanted losses.
Whats the worst than can happen?
Be brutally honest with yourself, have you considered the worst that can happen? If you have, is this outcome manageable? If not, the risk is not worth it as it will leave you with nothing. The concept of risk is that the outcome is often unknown which is why this can be a hard, but be realistic, we can often use our gut feeling to outline the worst case scenario.
Many successful entrepreneurs were spectacular failures before they were insanely successful, Richard Branson for example tanked two companies before Virgin took off! With this being said, dont overestimate the possibility of bad things happening. This habit of thinking can limit your rationality when it comes to risk analysis.
2. Will you regret not taking the risk?
Hinesight is a wonderful thing, but as often, when it comes to risk we dont have this benefit. Nonetheless, try to consider how you’d feel in say 10 years if you fail to take the risk? The risk of inaction can be just as high as action itself as you could sabotage your potential success.
Your whole life is a series of risks. You get to choose which risks to take. Often, the refusal to take a business risk is itself the riskier alternative.
3. Have you been wanting this for a long time?
If you answer “yes,” this is your first tell. Take the risk. The very fact that your desire has persisted in your mind is an indication that you should go forward.
4. Does the risk outweight the current position?
Be sure that you’re able to live with your decision, try to determine if the outcome of taking the risk is superior to your current state of affairs.
5. Where do your business partners stand?
Try to identify if you have the support of cofounders, investors, and key decision-makers. In many cases, the leader or founder will be the one pushing to take the risk, but others need to agree with it, especially if you want the appropriate support if it were to fall through.
6. Are those dependant on you willing to take the risk
Make sure to consider those others involved in the risk, such as your spouse or children. Even business business risks can have personal repercussions whether this be your personal position at the company or the company as a whole.
If they’re willing to take the risk with you, you’ve gained cheerleaders. If they’re unwilling to take the risk, you may wish to reconsider.
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