Entrepreneurship is NOT about taking RISKS.
It’s about mitigating risks.
It’s almost a cliché in business. You must be a risk-taker to be an entrepreneur: “it’s all about taking risks”. Even the iconic Canadian Chris Hadfield is quoted as saying:
“Almost everything worthwhile carries with it some sort of risk, whether it’s starting a new business, whether it’s leaving home, whether it’s getting married, or whether it’s flying in space.”
Even Facebook founder Mark Z is quoted as saying
“The only strategy that is guaranteed to fail is not taking risks.”
That is a big business name to disagree with. Respectfully though, I believe there is an important part missing to this statement….. and that is ….. you need to mitigate the risks that you take.
Business owners are reminded again and again “you have to take risk or;
- you won’t grow,
- you won’t succeed,
- you won’t get anywhere in life.
Let us go back to astronaut Chris. No-one gets blasted into space on a whim and a prayer with a bunch of investors chanting “nothing ventured, nothing gained.” Clearly that is a recipe for disaster. When an rocket is launched calculations are triple checked and then checked again. Training is done over and over until it becomes as natural a breathing. And all engineering is done to the tiniest fraction.
Is there still an element of risk? Yes there is. There is always something unknown that could happen, but now you have mitigated that risk. The chances of something bad have been greatly reduced by the planning and preparation that took place first.
And so it should be with business.
With the same plan and calculation in your business you can mitigate the risk and avoid certain disaster, even if it isn’t quite as messy as a failed rocket launch. Exercising caution to a new idea, product or service is something that gives us time to plan and prepare and then pull the trigger. Marketing plan, social media plan, sales plan, operations plan, human resources plan, budgets, cash flow projections and anything else you need to make your business work. (All of these are nicely bundled up into one robust business plan.)
I can already hear some of you shaking your heads and disagreeing with me.
Before you tune me out, hear me out. I also understand that on the opposite end of the scale to risk is the dreaded “over thinking” syndrome. Never pulling the trigger because things are not yet perfect is no better than blindly taking risks.
“But Donna, as a business owner I don’t always have time to ponder and calculate. Sometime you need to act on an opportunity right away!” Agreed. Sometimes you have to make quick decisions.
Making quick decisions is not the same as making decisions with no thought at all. The brain is a powerful tool that understands concepts much quicker than we sometimes realize. If you have a robust business plan in place you can make those decisions quicker still…… while still exercising caution and mitigating the risk. Your brain is just working faster with the information it has from your business plan.
Remember, exercising caution has nothing to do with being afraid. Quite the opposite in fact. Exercising caution is smart. (Side note: if you have young kids start telling them it is okay to feel cautious rather than tell them something is scary. Fear stays with us into adulthood….even when it is irrational. Being cautious is smart and that is something young and old can feel good about.) There is a reason why you hear the term “calculated risk”. When you have weighed up the chances of success or failure, when you know even if this fails, the outcome of my business is still strong then you can take that calculated risk.
- If risk-taking stresses you out. It’s okay. Exercise caution, calculate the risk and move forward.
- If change bothers you. Weigh up the pro’s and cons, calculate the risk and move forward.
- If you ever thought you could never go into business because it is “too risky”, exercise caution, calculate the risk and move forward.
As always if there is anything in your business you would like support or advice on, reach out. Connect Now Business Network was set up because we want you to succeed.
Donna is the CFO of Connect Now Business Network, a fourth-generation entrepreneur and financial consultant. She has worked with money or cash management for most of her career. What started out collecting fines for the legal system or collecting debts for private enterprise progressed into bookkeeping with an accounting firm. This gave her a solid understanding of what you need to run your business and what you accountant needs to prepare your year-end financials and tax returns. After many years in this field and 2 children later it was time to set up her consulting company Beyond Balanced Books. Donna has a passion for helping business owners understand their financials and how best to utilize their money to grow their business in the quickest way possible. Her unique approach focuses on not only the business cash flow but how personal cash flow affects the business growth as well. She has a way of explaining numbers that makes them less scary. Donna delivers her advice with humourous flare backed up with solid accounting practices.