Taking a Risk in Your Business
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Taking risks is part of life, and it’s hard to succeed without ever taking any form of risk. It’s been said that “many a false step was made by standing still.” The biggest risk of all may be not doing anything and settling for a comfortable and boring existence.
You grow when you take risks. Think of the last time you felt the most alive. What were you doing? It was most likely when you were learning a new skill or doing something that challenged your limits.
Most people are willing to accept their lot in life. Even though there is a very small upside to doing the same things, they are too afraid to try something new. However, if you want to achieve extraordinary results, you need to take risks.
That doesn’t mean you should jump out of an airplane without a parachute. Your goal in business and life is to minimize risk while maximizing the upside.
Let’s use a scale of 1-10, with one being the worst possible scenario and ten being the best. If a certain marketing endeavour has an upside of 10 but a downside of 0, it might not be worth taking. For instance, what if you have $1000 marketing budget for the quarter and you decided to invest 100% of that into a new advertising campaign?
The upside is easily 10 if it works. However, the downside is a big fat 0 because economic hardship is a real possibility. This may be a risk you shouldn’t take.
However, if there is an upside of 4 but a downside of 4 with something you are considering, that doesn’t mean it’s worth it either. There just may not be enough potential in this endeavor. The goal is finding the solution with the highest potential while minimizing the risk (although it can never be eliminated entirely).
Remember that there is a 100% chance of failure for not trying. Getting rid of risk is impossible. In any decision you make there is an inherent danger. When you drive, you risk a life-threatening crash, so getting rid of risks shouldn’t be the goal. Your goal should be managing the risk. Everything you do needs to have a high upside and a relatively low downside.
The key to success in business is to manage both the risk as well as the reward. There is a point where the risk outweighs the reward, so you need to carefully evaluate it and then make the best decision possible.
However, don’t get the old “paralysis by analysis.” It’s impossible to have all the information before acting. The key is to plan out to the best of your ability the risks and rewards of possible action and then make the best decision possible. Chances are that when you really think about the worst-case scenario for most things you fear, it’s probably not as bad as you think. Get going and take those rational risks!
