How to take Calculated Risks in your business and entrepreneur journey.
As an entrepreneur or business owner, you’ll face difficult decisions. The ups and downs of business are normal and every decision you make has some sort of risk attached. Starting a business is a risk in itself, but the time and investment can be well worth it. You have to be willing to jump in and take risks for the potential to develop and grow.
However, all risks are not created equal. With a strategic plan behind your business decision making, you can help create a better outcome. Calculated risk-taking evaluates all potential outcomes through research, rather than gambling on your future. Focus on the potential negative outcomes and come up with solutions. Ask questions like – if the deal lost money, how would we bounce back?
Whether your business is building a new product, signing a new partner contract, or pursuing a new marketing strategy, keep the steps to calculated risk-taking in mind. Not every business decision goes as planned, so be willing and flexible to pivot if needed.
Keep in mind it’s impossible to predict how your calculated risk will play out. As much as a decision could lead to future success, there’s also the potential for failure. Bellow are I will outline the steps to calculated risk-taking and tools to help you recognize red flags and be as prepared as possible.
What is a Calculated Risk?
A calculated risk is a risk that’s carefully planned out and based on thoughtful consideration and weighs all potential costs and benefits. Calculated risk-takers plan out their goals and steps they’ll take to achieve them. Instead of rolling the dice, they find ways to alleviate risk so that their vision is in line with reality. Keep in mind that every business decision comes with its own set of advantages and disadvantages. When you push your standards by taking a calculated risk, those factors dramatically increase. Successful risk-taking is done through thoughtful planning. When you plan ahead, you can set up a strategy and plan that has more potential for success.
Steps to Taking Calculated Risks
1. Do your Due Diligence
A decision shouldn’t be based on emotions. Instead, justify your ideas on logic and evaluate every detail. Break down your decision into smaller decisions so you don’t feel overwhelmed with every possibility. Those smaller decisions are independent risks that lead to your overall goal. Instead, analyze all possible routes and find out which path is most efficient. You can’t afford to scan over details you think are minor. One helpful tip is to ask advice from a trusted advisor. Invest time by going over all of the numbers so you’re not scrambling last minute to undo any mistakes.
Proverbs 15:22 Plans fail for lack of counsel, but with many advisers they succeed.
2. Anticipate Mistakes
As you consult a trusted advisor, the two of you can point out any red flags or potential issues before they surface. Some excellent probing questions to ask include: -"If a deal loses money, how will my business respond?" -"If a partnership breaks down, what course of action will I take?" -"If a project falls behind, how will I meet the deadline?" Seek balance. Can your bottom line afford to take any hits if the opportunity you sought out starts to fail? If you’re dialed in and keep track with the numbers that go into your calculated risk, you’ll be able to assess the effectiveness of your strategy. It’s also a good idea to consult a mentor. Introduce them to your idea and plan of action so that they can point out any flaws or mistakes that they may have made in the past. Years of failure on their end can save you valuable time on your journey to success.
Proverbs 11:14 Where there is no guidance, a people falls, but in an abundance of counselors there is safety.
3. Create a Plan of Action
After you take the time and energy to collect all of the valuable information you need, it’s time to create a road map. Construct a well-built plan of action along with a list of possible outcomes. Don’t take shortcuts so you’ll be able to weigh how your risk will pan out. While you may be planning ahead months or years in advanced from your desired outcome, regular checkpoints will keep you focused to stay on track.
4. Don't ignore the data
Don’t ignore your research and data. You have to rely on them because they’ll point out when the right opportunity to take the plunge arises. That being said, it’s okay to say “no.” Not every idea should be pursued, that’s why you must emphasize the importance of laying down the groundwork and the steps you’ll take. It’s difficult to pursue an unexpected or shocking opportunity if your plate is already full.
5. Be Ready to Pivot
Sometimes you have to revise your well-planned strategy. A budget may get cut and a partnership can fall through. Your strategy is good if it gives you flexibility to change the course and keep a forward-thinking mindset. Let’s say that you're chasing a new venture with a $50,000 budget. Two months into the four-month-long project you find out your budget is being cut by $10,000. What do you do? With a flexible plan, you can head back to the drawing board and assemble a creative solution.
Benefits of Calculated Risk Taking
By taking calculated risks and not going "All In" on all your ideas, entrepreneurs will stop sabotaging their business growth. Nothing special happens to people who are too predictable and don’t innovate. A calculated risk pushes you out of the ordinary. Even if your plan turns into a huge flop, you’ll grow from your willingness to try something new. It’s not time wasted, it’s a way for you to learn how to improve next time.
The demands in your market are always changing. As they do, your customers' deep desires and needs will evolve. They need something new. If you’re the person who has the guts to deliver that to them, you’ll be rewarded. Not only will these customers remember your product, but they’ll spread referrals for you giving you a robust business.
Transform the Market
Being average and playing to the status quo won’t cut it in today’s world. To stay ahead of the competition, you’ll need to come up with ideas and do the things others aren’t willing to.
Crush your Fear of Failure
After you take the plunge and find out your risk made you successful, you’ll be open to more possibilities. What else are you capable of? If you can break through the illusion of your limits, how else can you improve?
Learn to Rely on Others and Trust More
As you eliminate your fears, you’ll learn to respect and trust the process that took you there. Your team and your close business partners are there for you to consult with if you need an extra boost of confidence.
It's time to take calculated risks for your business and entrepreneur journey!
Characteristics of a Risk Taker:
1. Optimistic about the possibilities – Optimism doesn’t just make you feel better, but more confident. As a leader or entrepreneur, having confidence in your decisions is key, especially when you have others following you. 2. Comfortable taking chances – Whether you’re pursuing a new business partnership or creating a new product that’s outside your wheelhouse, taking a risk is where growth happens. The more you take chances, the more comfortable you’ll become. 3. Agile and able to adapt – When there’s ambiguity, it’s necessary to take the measures to prepare yourself for any possible outcome. Be able to adapt and pivot if a new business venture or campaign doesn’t go as planned. 4. Focused on execution – Just as important as planning and preparation is the execution of an idea or project. Have a team in place to support you. A strong team can create the desired plan of action and create a plan B if your plan doesn’t go accordingly. These characteristics don’t always come naturally and can be learned through experience. Someone with 20+ years of experience in the field will have been through situations that maybe you haven’t. A mentor can provide insight into mistakes they may have made.
Be of Good Comfort Designs is here to help entrepreneur and business succeed online. First, we evaluate your aspirations, visions and goals. We help you build an online brand by telling your stories while creating educational content done for your target audience. If they have a product or a service, we help you promote it through strategy and design.
When you're an entrepreneur or a business owner, you have to take risks. But, you don't need to take crazy risks. Taking calculated risks is a great way and sure way to succeed. At Be of Good Comfort Designs, we can help you do just that.
Schedule a complimentary consultation session with me and we will help guide you on to a successful entrepreneurial journey.