Taking Risks is Essential to Business

The unknown can scare anyone, and the more unknown something is the more it can scare us into not acting.

Nothing Ventured, Nothing Gained

All of us have probably heard numerous times, “Nothing ventured, nothing gained.” I have no idea where this statement originated, but it is certainly true. Oh, I suppose we do occasionally experience an unexpected gain when we have done nothing to cause it, but that is the exception. Consider the stock market. There is inherent risk in investing, but there also can be significant returns. If we don’t venture to invest we are assured we will not gain.

Calculated Risk Taking

Not many people would suggest just jumping into something that required use of your resources without first analyzing it. After analyzing, it may be apparent that the risks far outweigh the potential benefits. In that case it is clear we should shy away from it. On the other hand there are situations where we know with a high degree of certainly that the risk of loss is small and the potential gain is large. In that case it is clear we can take the risk if it is something we truly want to do. These more clear-cut times are not what usually cause us to struggle with a decision.

What about the Unknown?

Perhaps you are an entrepreneur, inventor or small business with a product you are considering offering. Since the product is new there may be limited information available to assess the risks involved. This is a situation where you sometimes have to use your intuition. That said, these days there are often ways to test the acceptability of a new product. Of course, you may find that the cost to produce a product is too high to justify the risk. But, if the cost is not too high and you believe in the offering, why not take the risk? Without taking some business risks it is difficult to move forward and grow. Before you act though, ask yourself how you can minimize potential loss by testing the concept before jumping in with both feet. There are times when the only way to do something is to jump in completely. It’s like swimming. Sure you can stand by the water and dip your feet in, but unless you get totally in you will never swim. The same is true in business. Risk is essential and unavoidable in business.

Danger in Not Taking Risks

Sometimes we get so focused on analyzing the risks of a particular action that we fail to consider the risks of not acting. Networking involves the risk that you will not make the connections you hoped to get, but not networking assures you won’t. Failure is not the end of the world and unavoidable to move forward.

I have used this quote before but think it summarizes the concept extremely well. “You miss 100% of the shots you don’t take.” – Wayne Gretzky. In addition to this, Gretzky also offers another quote that shows the importance of looking ahead, “I skate to where the puck is going to be, not where it has been.” This really addresses how staying stuck in the present creates lost opportunities. Things are constantly changing and in order for a business to stay competitive, it is critical to look ahead, accept that will be some failures, and take some business risks.

Are you and your company taking sufficient risks to remain relevant? Are you willing to accept that some failure is unavoidable?

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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