There’s simply no avoiding risk when you’re operating a trade, eCommerce, or logistics-related small business. The only way to handle risk is to make solid, calculated decisions. The way you handle these risks and the bold decisions they prompt you to make can determine the success, or perhaps the downfall, of your venture.
Even the most experienced small business owners and seasoned entrepreneurs can stumble upon the obstacle that is corporate risk taking. However, without taking risks, your business will never enjoy the opportunities it needs to expand and thrive in your industry or sector.
The trick to successfully taking risks is to weigh up each risk against what you stand to gain from taking it. Base your decisions on the risks that are most likely to benefit your business in the long run.
It’s also pertinent to remember there’s a fine line between choosing to take an unnecessary risk and making a big, bold decision. One could land you in hot water, and the other could be the best thing you have ever done for your business. As the owner and operator, it’s up to you to decide if a decision is worth the risk attached to it.
Exploring the Inevitability of Risk-Taking
Taking risks is inevitable when you own a small business, and particularly if you operate a startup of any kind. You will often need to use your own capital, your contacts, your networking abilities and your innovation to get your enterprise off the ground.
Launching a startup is a risk in its own rite, and there will be plenty of other risks and obstacles along the way. You will have to make bold choices if you want to maximize your business’s chances of success.
Striking a Balance Between Hopefulness and Proactive Planning
Making big, potentially risky decisions is par for the course for every small business. However, that doesn’t mean that you should dive head-first into every decision that needs making without considering it carefully first!
Entrepreneurs who jump into decisions without planning or researching their choices are putting themselves at exceptional risk, making each decision significantly more risky than it should be.
Planning is the key to making major decisions in an educated and deliberate way.
A smart business owner will look at a decision from every angle they can think of. They will brainstorm various possible outcomes and multiple courses of action that will lead to the best outcomes for their companies.
Many entrepreneurs consider worst-case scenarios during the planning process. Think about the worst things that can happen if you were to take a certain course of action. What would the impact be on your finances, your reputation and your operations? Once you have figured this out, you will be able to assess whether or not your business will survive should you take a risk that doesn’t pay off. This assessment will enable you to put mitigating protocols in place to prevent worst-case scenarios from becoming realities.
Careful research and planning can effectively minimize the risks associated with a bold decision. Plus, they can steer you away from decisions that carry too many risks and too few potential benefits.
Mastering the Decision-Making Process
The more big decisions you make for your business, the easier this process is likely to become. Eventually, you may reach a point where you can make course-changing decisions and take calculated risks with confidence and aplomb. As mentioned above, the key to becoming an expert decision-maker hinges on your ability to research and plan your moves ahead of time.
You may find that your research and planning processes shorten over time too. As you become more comfortable operating your business, you’ll be better equipped to foresee the outcomes of each decision you make. You will probably have proactive measures and contingency plans in place thanks to previous risks and decisions you’ve had to navigate.
Adopt a Phased Approach
Small businesses cannot always afford to take significant risks because of their limited resources. A phased approach can help. It involves making small changes and taking minor risks over time to arrive at the same destination that one huge decision or risk would lead to.
Phased strategies are helpful for businesses that are in their infancy. They help to build resilience and tolerance against risk, while enabling businesses to replenish their resources and recover adequately before the next phase begins.
Judge When to Make Concrete Decisions
Some risks are fairly simple to evaluate, and many decisions simply require a bit of common sense. If your business operates in an area prone to crime, it’s logical to install an alarm system in your office to protect your assets. Or, if you have a small home office you need a security safe to keep your documents well secured. However, the answers are not always as clear with other business-related risks.
Even the most seasoned of entrepreneurs can get altogether too wrapped up in the minor details of a decision. While it is a good idea to consider potential decisions carefully, you also risk missing opportunities while focusing too closely on the fine print.
It’s no use waiting for the ‘perfect time’ to take a calculated risk or make a necessary decision. You need to be able to judge when the appropriate time is to research and plan, and when the time is right to strike. Planning, mitigating risks, researching outcomes, getting advice, and making decisions all need to be part of your process. Inaction can be far more troublesome for your business than deciding against a specific route.
Learn from Your Failures
Most big decisions carry the risk of failure, regardless of their nature. It’s impossible to completely negate the risk of failing or making poor decisions sometimes. With that said, you need to be willing to fail, as you cannot operate a business in constant fear of failing. If you do, your business is not likely to ever reach its full potential.
Be willing to learn from your failures and misconceptions. Making mistakes and taking unworthy risks provide opportunities for you to determine better courses of action in the future. Most entrepreneurs have experienced their fair share of failures, and the successful business owners were the ones who were willing to learn valuable lessons from these challenges.
The Takeaway: Plan Before You Take The Plunge
Taking risks and making big decisions are facts of life for business owners and entrepreneurs in virtually every industry. You can never mitigate the risk of failure entirely, but you can minimize it by consciously planning for the future and taking calculated, educated risks.
Experience, insight and skill will allow you to steer your business in a positive direction and cement it in your industry as an innovative, progressive, and focused competitor.