Any Entrepreneur will tell you that sometimes you just have to take a risk. Often it’s the only way to grow a small business and learn more about what you are doing and where you want to be. But, if you’re a budding entrepreneur just starting out, or thinking about starting a venture, the idea of taking risks is very scary!
Any risk is frightening because it involves the unknown. What makes the kind of risk that you should have as part of your arsenal of entrepreneur skills different from throwing yourself out of an aeroplane with a parachute however, is that it is always calculated and never reckless.
Here’s how to use risk successfully in your business:
Do your homework
Information is everything, and the more you have, the less risky your risk will be (if that makes any sense).
If you are planning on launching a new product or service, it is vital to do as much market research as possible. Ask people to fill in questionnaires, take opinion polls on social media, even visit the shops to see if you can notice patterns in what people are buying. The more info you have on what your target market wants, the more likely you will be able to develop a product or service that sells well.
Assess the risk
While extreme sports may risk your life, in business it is your time and money that is at risk. Assessing risk involves deciding whether the potential profit or other benefits of success are worth the investment in time and money. You also need to consider what would happen in the worst case scenario if your idea should fail (not to be pessimistic, but you need to be realistic).
Writing a list of pros and cons may help you with risk assessment. If the financial risk involved could leave you bankrupt, then it’s probably a better idea to set yourself goals to raise funds specifically for your project, rather than risk everything too soon.
Learn from your mistakes
Successful entrepreneurs know that even if taking a risk doesn’t work out, you can still learn from the experience.
Rather than letting failure get you down and make you give up, evaluate your product or service and try to understand where you went wrong – whether it’s the product itself, or how you presented it to prospective clients. There’s always something positive to take away that you can use to do better next time round.