By Irma Hunkeler
Want to be your own boss? Then be prepared to take risks. Starting out as an entrepreneur is a whole different ballgame to working for an employer. Taking the road less travelled has a million benefits, but it’ll also require you to change your appetite for taking risky decisions.
Fact is, taking risks and making difficult decisions is necessary for entrepreneurs all over the world – from those just starting out to the seasoned veterans. So what do you need to know about risk-taking? Here are six pointers:
Taking a risk is perfectly normal
If the idea of taking a business risk seems scary to you, stop worrying. Research from 888poker shows that humans are hardwired to take risks – we make 35,000 decisions every single day, from the small to the not-so-small, to the huge. So risks are part of the very fabric of our lives. The sooner you come to view risks as being perfectly normal, the sooner you’ll be comfortable with the idea of taking them.
Every entrepreneur has their own risk story
Read any interview with a famous entrepreneur and somewhere along the way they’re sure to mention risk, and how taking risks helped them get to where they are. Every successful entrepreneur has taken a risk at some point in their business journey. Let’s take Facebook CEO Mark Zuckerberg as an example. He’s fond of talking about taking risks, once saying: “In a world that’s changing so quickly, the biggest risk you can take is not taking any risk.”
The worst thing you can do as a businessperson is to sit still and stagnate. Do so and you could fail. Take a risk and you could succeed.
You need to know about cash flow
Life as an entrepreneur can be exciting and full of adventure. But it also needs you to be officious and diligent when it comes to money. One of the biggest challenges around taking business risks is ensuring you have a steady cash flow backing you up. If a supplier fails to pay you on time and, as a result, you can’t pay your staff, you could be in deep trouble.
So focus on cash flow – ensure you manage it properly, perhaps through having an emergency reserve fund, or securing concrete deadlines and payment terms with suppliers.
You will make mistakes
To err is human. As an entrepreneur, you can practically guarantee that you’ll make a mistake. Perhaps many mistakes. Don’t be fooled into thinking that risks will always pay off. In reality, even if you’ve weighed your decision up, the possibility of failure always remains. Just like every famous entrepreneur has a story about how they’ve taken a risk and succeeded, they are bound to have one where things didn’t quite work out as planned.
When you make a mistake, don’t lament it. Look at why you failed, learn from it and move on to bigger and better things.
There are different types of risk
Risks can be broadly defined as known risks, slightly-known risks and completely unknown risks. Known risks are backed with data – you have evidence, for example, to suggest taking such a risk will work out.
Slightly-known risks are based 50/50 on experience and the unknown. These ambiguous risks involve some knowns and some unknowns – you’ll need to work out your appetite for taking these kinds of decisions.
Completely unknown risks are exactly that – you have no idea if they’ll work out at all. With no past evidence or experience to suggest something will succeed, an unknown risk is, well, risky. But it could pay off.
Taking risks involves effort
Entrepreneurship is not easy. As you develop your business, taking risks along the way, you’ll need to invest significant amounts of time and effort – physical and mental – into pursuing your goals.
For many, this means less time spent with family and friends, less sleep, less personal downtime and more. But, especially in the early days, this might be a risk you’ll need to take.
Irma Hunkeler works for digital marketing agency BlueGlass.co.uk