Success and complacency rarely go hand-in-hand. Yet, when it comes to taking risks, many prefer the status quo over the intimidation and unsteadiness of the unknown. However, if you are an entrepreneur looking to further your professional impact and financial gains, risk-taking is a central piece of the puzzle.
Fortunately, there are certain realizations that may help reduce some of the trepidation that comes with delving into a high stakes situation.
Understanding your industry to the ultimate degree is crucial. Study the state of the economy within your specific market and field, examine the trends, and recognize your competition. Make note of how certain demographics respond to specific products and services, and use this knowledge to strategize your own plan of action. Also, be sure to research costs and properly estimate your expenditures. Only go forward with the right amount of venture capital.
Understand Different Risk Types
Some risks are easier to gauge than others, and recognizing what type of risk you are dealing with will help you better prepare for the outcome. According to Entrepreneur.com, most risks can be broken down into three categories:
- Calculable risks: include a succession of known certainties that assist in a logical forecast of the probability for success. These decisions can often be formed through use of documented historical data.
- Ambiguous risks: involve a combination of known certainties and unknown factors which obscure calculations and predictions. These types of risks are common in business, and include factors such as economic fluctuations and consumer tendencies which can often be difficult to foretell.
- Unknown risks: occur when a completely new and unique product is introduced to a market. All successful, groundbreaking innovations must outlast their unknown risks.
Consider a Mentor
Never underestimate the power of experience. Finding a mentor who has already witnessed the positives and negatives of the same situation you are entering is invaluable. Having a qualified guide with which to discuss ideas and decision options, will reduce stress and even the possibility for error.
Set a Limit
There is no denying that true dedication is the best, and sometimes the only path to success, but is it ever necessary to draw a line? Only you will know if you’re facing your worst case scenario. Perhaps after exceeding your maximum budget following countless trials and re-brandings, your product simply shows no signs of landing with a consumer base. In cases of the most risky projects, it’s a good idea to contemplate a “parachute plan” or exit strategy ahead of time, which your team is also aware of. Chances are you won’t need to use it, but as we know, no risk is a guarantee, so if the original plan collapses, you won’t lose every ounce of invested resource.
Factor in Your Team
Even if you are the mastermind behind your budding enterprise, there are still investors, partners, co-founders, and other central decision-makers to take into account. Your associates are an important component in the ultimate success of your endeavor. While you may be the one proposing and advocating the risk, the rest of the team should also be onboard. Cohesiveness and support are fundamental to a successful endeavor.
Your personal life is another door not to leave unchecked. Consider who else your risks will affect. Be sure that you, and those who are personally closest to you, are aware of and prepared for the range of possibilities, both negative and positive. If others whose stability is personally affected by your decisions are not in agreement, you may need to reassess your choice.
Balance Patience with Momentum
If immediacy is your only option for success, you may need to rethink your plans. All entrepreneurs must be prepared for a few roadblocks along the way. Don’t be impatient, as the most inspiring success stories are often sprinkled with adversity. Nevertheless, while you must understand that your plans will likely not materialize overnight, allow sporadic disappointments to propel and motivate you toward new operative strategies. In other words, keep your momentum.
Although smart risk-taking involves a great deal of calculation and consideration of many factors, it can also be a fearless choice which often results in great returns. However, a wise entrepreneur who has a clear plan for a product he or she truly believes in, will research, weigh all options, and factor in all those affected with a sense of patience, perseverance, and good judgment.
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