“There’s no reward without work, no victory without effort, no battle won without risk.”
—Nora Roberts
Each of us takes risks every day. Every time you cross a street, drive your car, or fly the friendly skies, you take a risk. Most of these small, everyday risks are unavoidable, but we take them because it’s impossible to avoid all risk in life. Entrepreneurs especially take risks when they venture into the unknown as they start and grow new businesses. In this article, I’d like to talk about why taking risks is important for entrepreneurs and how you can make sure the risks you take are calculated risks.
Nothing great was ever achieved without the possibility of failure. Despite tons of preparation and hard work, you may take risks that don’t work out. For instance, you can never know for certain that your customers will buy what you’re offering. In 1958, Ford’s market research virtually proved to them that their new car, the Edsel, would be a smashing success. Ford spent tons of money on a yearlong ad campaign, only to watch their sure thing sink like a stone. On the other hand, many companies, like FedEx, routinely risked all in their early days and won big as a result. Again, in business, you must take risks in order to reap rewards, but you need to make sure you take calculated risks. To that end, let me quickly outline three possible ways to help you take calculated risks:
First, do your research. While Ford’s story proves that market research can’t guarantee success, you must still do your research before you introduce a new product or service or launch a new venture to make sure that there is a solid market for your offering or that what you’re proposing is viable. The time and effort you spend on this is worth every penny and will help make the risk you take a calculated one.
Second, keep your risk manageable. Want to launch a new product or start a new company? Great, but don’t launch three new products or start two new businesses at the same time. This should go without saying, but you have only 168 hours in a week, so manage the number and size of the risks you take so that they don’t end up managing you.
Third, stack the odds in your favor. When you take risks, make sure to work extra hard, leave no stone unturned, and fully invest your time, energy, and resources in your new venture or project. Because when you fail to do all you can to launch your product or venture, you actually increase the risk that your new venture will fail. For instance, you might be tempted to skimp on advertising or other marketing during a product launch, but doing so cold very likely endanger your success. Giving any less than your full effort is to risk failure.
As you follow these three basic tips on how to take calculated risks, you’ll increase your chance of achieving great success, both in your business and in life.
Derek Rundell, is a successful business leader, operator, and serial entrepreneur. Derek has founded, managed and sold businesses in the technology, media and finance industries. He sits on several boards and serves as an advisor/investor to numerous established businesses and startups. Startups are Derek’s real passion, and in addition to building his own portfolio of technology, media and financial ventures, he invests in and mentors startups and entrepreneurs. He is passionate about sharing his knowledge and helping other businesses succeed.