Be a More Productive Risk-Taker in 2014
For most small-business owners, there’s a big difference between taking calculated risks and behaving recklessly. Doing nothing qualifies as reckless behavior, because maintaining the status quo in an ever-changing marketplace is almost always a recipe for failure.
To tilt the risk-taking odds in your favor, adopt the following strategies:
1. Know your goals. Risk-taking should never happen in a vacuum. What seems like a tempting business opportunity becomes foolhardy when it’s unrelated to your overall goals. “Consider failed brand extensions, such as Colgate’s idea to sell dinner entrees in the early ’80s or the short-lived Hooters airline that was grounded after only three years,” business writer Maryalene LaPonsie advises. “In a crowded marketplace, seemingly random business expansions are rarely smart moves.”
2. Evaluate the risk. Before making a move, take time to gauge the level of risk involved. Analyze the approximate costs and benefits, the likelihood of success, and the consequences of failure. What are the pros and cons of taking a chance? How much can you afford to lose? The anticipated gains should never outweigh a threat to the well-being of your business.
3. Seek advice. There’s a reason for cultivating a network of friends and colleagues: Their advice either increases the knowledge you have going into a new venture or helps you decide that the risk is too much to bear. Particularly look to people whose experience and expertise differs from yours. The objective input of trusted advisers adds depth to your own analysis of the situation and elevates your decision to a calculated risk.
4. Involve your employees. It’s unnecessary to enter into risk-taking alone. Once you decide to move forward, include employees in the process. Ask them to help you identify goals, pinpoint the business’s risk tolerance, and make the risky move more viable.
5. Start small and build to larger risks. Find places where you can take small risks to grow your business. Closely monitor the entire process, from conception to execution. If the venture succeeds, your confidence will be strengthened for taking a larger risk the next time around. If the venture fails, you can benefit from the lessons learned.
6. Review the outcome. When you take a chance and are successful, don’t rush into another risky situation. Take time to review the favorable outcome — how you got there, what was at stake, what you gained in the process. This information will prove useful when you explore your next growth opportunity.
7. Don’t blame others or stop taking risks. If taking a given risk proves unsuccessful, don’t try to pin the failure on your employees or advisers. The decision to move forward was ultimately yours, and the responsibility for its outcome lies with you as well. But don’t let the experience keep you from taking calculated risks in the future. Small-business owners know better than anyone that failure is just part of the entrepreneurial equation. Bouncing back and remaining committed to positive action is the surest path to success.
Lee Polevoi is an award-winning business writer specializing in the challenges and opportunities facing small business. He is former Senior Writer at Vistage International, a global membership organization of CEOs.