The art of risk taking has always been something that has gone hand in hand with business. The risk reaps the reward, but it of course isn’t always as simple as that.
Risks can also leave you down and out with nothing but a heap of debt you need to pay off. That’s why risks need to be calculated in order to increase that chance of reward and ultimately success in business.
For some, it’s as simple as the toss of a coin. That’s what Fred Smith, CEO of FedEx ultimately did. He gambled the company’s last $5,000 on a game of blackjack in Las Vegas during the early days. He headed home with $32,000 in his pocket by the end of the weekend and made the business what it is today.
However, that perhaps isn’t the most sage advice when it comes to risk taking in business. Below you’ll find all you need to know about taking risks in business and reducing the losses that may incur.
A good place to start is by setting goals. Whether you write them down on a piece of paper, or create a huge manifesto, it’s the starting block everyone needs to build from. With no goals, you’ve no idea where you’re heading and ultimately that could lead to more confused decisions and loss of money.
Additionally, when you have goals in place, especially with deadlines in place, it will allow you to be clearer in the risks you take in order to achieve them. For example, a risky opportunity may come along which could help you achieve your goal. However, your goal’s deadline is still many years away. It will allow you to weigh up your options and determine whether the risk is worth that quicker win, or whether the safer option is to stick to your timescales.
Setting goals is so important in business, in fact you won’t find a successful business person out there without them.
Think Things Through
As briefly mentioned, weighing up the risk versus reward is absolutely essential and there are multiple examples out there where famous entrepreneurs have come to that crossroads with a difficult decision to make.
Elon Musk is a good example of this. Back in 2008, when Tesla, and the entire US economy was struggling, Musk had a decision to make. Tesla could be no more, or he could invest his entire $35million fortune in the company.
It was a gamble. The company was unable to deliver its first car and would have lost everything had Musk not stepped in. Today the company is worth more than Toyota, Disney and Coke and is a trailblazer in electric cars. To this day he is a man who takes calculated risks and is one of the finest examples of a business person who uses his brain before making any bold decisions.
Thinking is absolutely integral. More often than not when taking a risk, the decision you make will not only affect your business, but also your home life too. If everything’s on the line, don’t play blackjack – use your brain!
Make Clear Decisions
When you’re at the very forefront of a risk and it ultimately falls on your shoulders, taking charge is a must. It’s your business, your responsibility. The buck stops with you.
You should be calculated in your approach, think clearly and not get overly distracted by the chatter that may be happening outside your office door. Of course, trusted advisors should always be listened to, but also understand it’s your decision and you wouldn’t want to have any regrets over how you were influenced against your instinct.
Making decisions is what separates top entrepreneurs from failing ones, and it is almost certainly easier said than done. Be calm, collected and ensure you are confident in the decision you are about to make.
Ultimately, it’s all about weighing up your options. What are the chances of this risk paying off? How likely is it it will fail, and what effect will this have on both your business and your home life? Does this fit into your business plan and goals, or can you play safe and still be a success?
By asking all of these questions you are much more likely to make a well-informed decision and one that will reduce the potential risk of losses within your business.