As a savvy business owner, you might not be open to the idea of taking risks. Sometimes it’s tough to differentiate between an acceptable risk worth taking versus a risk that needs to be managed or avoided.
Every opportunity and innovative idea has a certain amount of risk attached to it. If you always avoid taking a risk, you’ll never learn anything.
You’ll be stuck in the land of ‘what-ifs’ while your competitors are out taking leaps and leaving you behind.
Below, we’ll discuss how to feel better about your risk-taking skills and offer tips on how to grow as a business owner.
What to consider before taking a risk
No matter what business you’re running, you’re going to make mistakes. And while a calculated risk could fail, it could also give your business a leading edge over your competition. There are four crucial steps to complete before taking a business risk. Working through each of these is the best way to manage business risks.
1. Identify the risk
You and your employees (if any) need to be aware of the risks involved with the actions you take. Empower your team to identify, manage and mitigate risks. This will prepare them for dealing with whatever problems may arise.
2. Assess the likelihood of it happening
Is it as certain as your co-worker Dave walking through the door every Monday with his favourite latte? Or is it only likely to happen on a leap year when a volcano erupts? Take some time to investigate the chances of this risk actually occurring.
3. Take preventative and corrective action
If it’s something like an occupational health and safety (OHS) risk, you need to swiftly plan out actions to make sure it doesn’t happen. For other potential risks, make a detailed plan of what to do in the event that it does happen, including details about who to call, how to resolve it, etc. Keep all relevant documents in a safe place where they can be accessed even if the building is on fire (so in the Cloud).
4. Document and review
It’s important to keep a record of the risks you’ve come up against and how you’ve dealt with them. When you review your list, you’ll see how effective your actions were. This will help you make changes for a better outcome next time the same risk appears.
No need to go it alone
Taking risks for your business doesn’t mean you have to do it alone. Hiring the right employees or advisors could help you make better decisions.
Once your profits start to increase, you can begin expanding your team. Hiring just one employee at a time makes it more affordable and eases your workload.
Don’t have enough room in the budget to hire a full-time employee? Try outsourcing small tasks to a Virtual Assistant. This will still get you the support you need to grow your business, without the overheads of a full-time hire.
Before getting investors on board
Taking risks to get investor attention can be tempting. The best thing to do is find ways to get investors on board with your small business venture with the resources you have. Once you’re up and running, it’s easier to show bigger investors how your idea can succeed.
It also gives you the opportunity to flesh out any reports or growth trends that can make a stronger case for your business. From there, you can convince them to join your venture.
Common risks that may cost your business
There are many facets of running a business you don’t want to be mucking around with. Some examples include insuring your business against theft, data breaches and property damage.
You may also need to look at workers compensation insurance and professional liability insurance, depending on the type of business you’re running.
Let’s take a deeper dive into two other costly risks you should be mindful of.
Hiring the wrong people
Sometimes we don’t realise the weight of the risks we’re taking. This often happens when you’re hiring new employees.
Finding a new employee is an expensive and time-consuming exercise.
Choosing new staff members is not a time to be taking risks.
Even if you persist with an employee who’s ill-fitted for your organisation, their dissatisfaction will affect overall staff morale. This reduces productivity and increases workplace conflict.
It’s vital to make sure you spend time building a team that will work well together and believe in your brand. Then, you need to reward them for their hard work and show them your appreciation to maintain a high level of job satisfaction.
Scraping by with old tech
It’s tempting to stick with technology long after it’s become a nuisance — if only because updating it is such a hassle. But updating your technology doesn’t just improve efficiency, it also protects you against cyber threats. Look at the tech you’re using and make sure it has the latest cybersecurity measures in place.
Editor’s Note: If you need help protecting your business website from cyber threats, GoDaddy’s Website Security has all you need to keep your business (and your customers) safe.
When business risks pay off
Sometimes in business, you just have to ignore the crowd and take a chance. Yes, it might be scary, but the potential benefits of taking the right risk could propel your business into something extraordinary.
Let’s take a look at two business entrepreneurs that had major success with taking risks.
Arianna Huffington, founder of Thrive Global and Huffington Post, was warned by many that her ideas were likely to fail.
Instead, she convinced investors to join her. It wasn’t easy. Even after launching Huffington Post, many thought it was going to be a flop. But Ariana sold it for $315 million and went on to start up Thrive Global.
Unlike many entrepreneurs who start their businesses out of necessity, Jeff Bezos was sitting in a comfortable high-paying job on Wall Street.
He ditched it to found Amazon. Why? Because he didn’t want to be left with a bunch of what-ifs at the end of his life. With his net worth now approaching AU$250 billion, his jump was worth it.
Final note on business risk-taking
When it comes to taking risks for your business, you’ll want to go into it prepared. Do your research before you make any choices and make sure you have the right support system by your side.
Remember, a good team of trustworthy employees and the right security tools can help provide your business the credibility it needs to attract investor attention.
The most important thing is to believe in yourself and be strategic with your risk-taking decisions.