For many people, risk is something we try and avoid whenever possible. From a friendly bet on a sports game to choosing whether or not to invest in home improvements before selling your home, risk can be part of our every day lives. But what happens when the risk has higher stakes?
In the world of business, often the most successful are those who take risks which no one else would, from launching a product others believed would not sell to deciding to invest in new premises to enable expansion. Of course, there’s no denying that taking a risk is not something to be taken lightly, particularly for start-up entrepreneurs, but it’s often unavoidable.
If you’re in the early stages of launching a start-up, Here are some of the key factors to understand about the close relationship between risk and business.
Risk and entrepreneurship are inseparable
First things first, if you are considering launching a business and are determined never to take risks, this may not be the right professional path for you. Starting a business involves risk right from the first sum of money you invest as well as the risk you are taking with your own reputation. It’s likely that you will be leaving a steady job to take the leap which is another risk. Hiring a member of staff, choosing a location for your premises and making changes to processes to try and improve efficiency. Every choice you make is a risk to a certain extent, so you need to be ready for it. Read more about mitigating risk during recruitment at Manila Recruitment.
Risk comes in many forms
There are several types and levels of risk. While there are of course the small or big risks, each also comes with a degree of calculable risk, i.e. you should be able to calculate your chances of success using ratios like these on The Balances. You may need to decide, for example, whether you should hire a stand at a trade show. To do this you can look at how much it will cost you vs how well the event has been attended in recent years. There may be unknown factors which will make the risk slightly ambiguous and some which will be completely new challenges, but as you get more experience in business you will find you are able to make better informed decisions.
Not all risks will be successful
It’s true that not all risks will pay off, but if you believe a decision has a 50% chance of success then you should be optimistic and a 75% success rate is something you should be even more confident about. Of course, the very nature of risk means that it will not be a good choice every time. Even the risks which seem likely to succeed can still fail, but in these situations you should have a contingency plan. If you’re uncomfortable with calculating risk, you should consider learning about the risk to reward ratio with betting websites like Unibet.
Risk-takers are often the most successful people
The ability to take risks is one of the most important traits which separates entrepreneurs from the rest of the population. If we never took risks, no new products or businesses would be launched, because a sure-thing is almost unheard of in the business world. Being an entrepreneur takes bravery and resilience as you need to stand out in the crowd and go against the tide. Balance this passion with a pragmatic approach to finances and a long term business plan, and you might just have the makings of success.