There’s a very old saying in business – ‘nothing ventured nothing gained.’ Extrapolating that into a longer form, it means that you can’t get anything out of a situation if you don’t put something in.
It makes logical sense as a statement, but putting something in always involves an element of risk. It’s impossible to know the future, so how are we supposed to know when to invest in an idea and when to hold back?
In a lot of ways, business is all about taking risks. You wouldn’t have set up your own business of your own if you didn’t have at least some tolerance for taking a chance. It would have been much safer for you to stay in regular employment, but you didn’t. That makes you a risk taker – but how much of a risk should you ever take on? How can you tell when a risk isn’t worth taking?
The truth is that it’s not always easy to know. There are several great examples of businesses who took crazy risks and won big, but they tend to be the exception rather than the rule. Taking big risks regularly is no way to run a business, but never taking any risks at all means you’re likely to be too cautious, and you’ll be left in the dirt by a rival company who take opportunities that you don’t.
The process of deciding whether or not a risk is worth taking a chance on is one which will be familiar to any gambler. With a high-risk opportunity, it becomes a little like mobile slots. You know full well that you probably won’t win the next time you spin the reels of a mobile slots game on website like Rose Slots, but you know there’s a chance you will. Often, you’ll also know what the jackpot value of that mobile slots game is, and that’s what gives you the incentive to chase it. The prize is high, but the odds aren’t great. What are you supposed to do?
If this really was a mobile slots game, you’d probably base your next move on how much money you have left in your pocket, and how much you can justify spending in chasing the prize. You also have to consider that in business, but there are other things to consider too. Just as there are companies who have risked it all and won, there are also may (probably more) companies who have risked it all and lost. Use our checklist below to help yourself and your company avoid being added to that list.
Are You OK With The Worst Possible Consequences?
Whatever the risk is, it will have an upside and a downside. The upside is, presumably, that it will make you a lot of money. The downside is whatever happens if the risk goes on. What would be the financial consequence to you personally, and your business? Would anyone have to be fired? Is the company’s future at risk? Would failure have a more damaging impact than success would bring a positive one? If you’re taking a risk, you have to consider the worst possible outcome to be as likely as the best possible outcome. If the worst possible outcome is that you’ve missed a great opportunity, then you should take it. If the worst possible outcome is that your business collapses because of poor risk management, you shouldn’t.
How Long Have You Been Planning This?
All of us – even the best-prepared and most strategically-minded – have a tendency to be a little whimsical with our ideas every now and then. A risk should only be taken in a hurry if there’s a time-limit on the risk. If your risky move could be made at any time, whether now or in six months, you should dwell on it. What seems like a fantastic idea right now might now sound so great six months down the line. Unless there’s a pressing reason to take the risk right now, don’t do it. Come back to it later, and if you still want to do it, it’s probably a good idea.
Will You Regret Not Doing It?
Nobody wants to reach the end of their life with regrets. Some of us can barely stomach reaching the end of our day with regrets! You have your whole career to think about. Is this risk one of those which you’ll regret not taking when all is said and done? Even if it’s a high-risk situation, is it a once-in-a-lifetime chance that will almost certainly never come again? Even if it is, it still might not be a good idea – but could you live with yourself if you never found out? The nagging voice in your head only gets louder over time. If this is the only time the opportunity to take the risk will present itself, give it more consideration than any other type of risk.
Are Your People With You?
We’re using ‘your people’ here instead of ‘your employees’ because not everybody has employees. You might be a sole trader, or you might work in a partnership. You still have ‘people,’ whether they’re staff, or your family back a home who will be affected by your financial well-being. With a big risk, you shouldn’t take decisions in isolation. You should absolutely give yourself the final say, but anybody who’s going to be affected by the decision should have a stake. What do they think? Can you clearly explain to them why you think the risk is worth taking? If you can’t, then it almost certainly isn’t. When do you do explain to them, are they happy to take it? Do they think it’s a good idea? Can they see flaws in it which you hadn’t thought of? The perspective of other people is important. They might pick up on tiny things you’ve missed – and those tiny things might be the difference between success and failure.
We’d suggest only going ahead with a risky decision if you’re comfortable with the answer you’ve just given to all of these questions. Some risks can have life-changing consequences. They can be the spark that starts the flame, or the storm that knocks you out. Be honest with yourself, be sure if your responses, and then act accordingly.
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