Whether we like it or not, risk is an integral part of life. Some people may view it as a challenge that may lead to improvement or success, while others see it as a reckless activity. In business, entrepreneurs associate risk with potential danger or loss but true entrepreneurs take risks. Most successful businesses took great risks not because they were reckless but because it’s the only step to take to move forward. Here are reasons why entrepreneurs embrace the idea of risk-taking.
Entrepreneurship is a risk in itself
Risk-taking is associated with entrepreneurship. Quitting your good-paying job to venture on starting your own business is a risk, which also requires a big sum of money. If you are coming up with products or services that have never been on the market before, then your reputation is also at risk. It’s basically a hit or miss and the success rate will depend on your creativity and perseverance.
Above all, hiring employees, making marketing tactics, and customer service involve tons of money, and there’s no absolute guarantee that they will eventually pay off. Thus, entrepreneurship is a risk in itself. So, you need to be prepared to take such risks before going on a business venture.
Risk-taking is not betting everything
Entrepreneurs do not just take any risk, they should know the type of risk they are facing and how to deal with it. Also, they should be prudent in moving towards their goals. When faced with a risk, it does not mean that you’ll immediately take the bait, of course, it’s mitigating the risk if possible as you work on conquering the obstacles along the way.
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Pay off is uncertain
Regardless of how calculated you are in your strategies, nobody knows if the risk you took will pay off. However, this should not deter you from taking more risks necessary for your business’ growth. No matter what kind of trade you are in, risks will always be there waiting for you at the next pit stop, and it’s essential to win over them in order to succeed.
Risk-taking is associated with personal satisfaction.
Taking risks can be hard for most people. Yet, it is believed that people who have the willingness to take risks are more satisfied with their lives. As the saying goes: regret of neglected opportunity is the worst hell that a living soul can inhabit.
Learn from failures
It’s clear that not all risks will pay off but a determined entrepreneur always looks at downfalls as an opportunity to grow and learn. So, if you took a risk but it didn’t come to fruition, that’s no reason for you to stop. Instead, look at the bright side of things and learn from what didn’t work to mold new strategies. This will be one of the ways for your business to grow, and as they say “when the going gets tough, the tough gets going.”
There’s no innovation without risks
As customers’ demands change, so should the products or services that a business offers. Thus, it’s necessary for business leaders to come up with new and innovative ideas to keep up with the changing times. Continue to change for the better with new and fresh ideas, that’s the only way to be innovative. While tossing in something new is quite uncertain, it will help you move forward and see what will work and what will not.
Less competition for those who take risks
Many entrepreneurs avoid taking risks because they are afraid of the repercussions. This fear holds them back which results in less competition for those who take risks and at the same time puts them in a favorable business position.
Microsoft and Google: Two Risk-Taking Success Stories
Microsoft would not have made it at the forefront of the gaming industry if not for their iconic gaming console: the Xbox. In 2001, when the Playstation seemed to dominate the gaming console market, Microsoft decided to go up against it with Xbox. This is not only the risk they took but also they spent twice as much of their marketing budget. Now, Xbox has become a staple for console gaming, already on its 3rd generation unit with the Xbox One, and has sold more than 24 million units in 2016.
While studying for a Ph.D., Google co-founders, Larry Page and Sergey Brin almost gave up on running their start-up company because it takes too much of their time. In fact, in 1997, Page almost sold it for $1.5 million. Today, their company is already among the most valuable companies in the world, and perhaps their product is the most relevant thing on the internet right now. Had they given up, the internet wouldn’t be as convenient as it is now.
Tips on how businesses should undertake a risky decision
It’s impressive how Microsoft and Google overcame the odds before reaching the pinnacle of success. For these two tech giants, risk is a positive thing and an integral aspect of their journey. For budding entrepreneurs, it should be too. While a risk may not be a good thing all the time, Microsoft and Google are the living proofs that it can also open a world of possibilities. Although there’s really no standard procedure that can guarantee its success, here are the principles that will help guide you on how to leverage the best out of every risk:
• As people’s demands change over time, economic trends shift. This results in new business opportunities. Spotting the trend is the challenge, as well as its timing; the earlier, the better. Hence making it very vital to keep up with your industry’s latest trends. Once you recognize the challenge, you need to act on it. If you think it’s good for your business, then go for it despite the risk.
• Discovering a low-competition market is like finding a treasure box. The simple concept of demand and supply: if there’s a supply but the demand is low, then the competition is low. That means there’s a lot of business to be filled in that niche.
• If you are facing a big competitor, then you should not be afraid to take risks. You might find your competitor’s weakness on areas they ignored, say, you are against an e-commerce giant that boasts high traffic, however, their website’s interface is disorganized. So, you capitalize on your competitor’s weakness by developing a much better website interface.
• It is best to think outside the box and not follow conventional business strategies. This may put your business in a favorable position.
• Setting aside a large budget for advertising in order to get consumers’ attention is no longer practical these days. But rather, think of creative ideas and leverage the power of social media and the internet for your outreach.
• If the risk did not pay off, then don’t let failure beat you down. Others will discourage you along the way but never stop believing in yourself. Keep in mind that persistence and resilience are the keys to success.
• Sometimes what your gut says can be the solution you are looking for. Oftentimes, the data and figures may hinder you from trusting your gut but never ignore it.
• If it comes to the point that your business becomes stagnant, then you shouldn’t be complacent about it. Instead, be creative and come up with plans that will improve customer satisfaction. Remember, happy customers will generate a lot of revenue for your business in the long run. Not only will your client base grow but also your business.
Understanding how successful companies approach risk and applying some of their strategies can help you accomplish what they have achieved. Not going out of your comfort zone and being contented with a small milestone won’t allow your business to reach its true potential, unless you embrace risk. If you can’t handle the idea of taking a risk, then you shouldn’t have ventured into a business in the first place. Always remember that new opportunities and innovation will come if you have an appetite for risk.