With 2016 falling fast into our rear view mirror, most of us have begun 2017 with a greater hope and renewed confidence. We might even be ready to take a few risks in our businesses. Not all risks, however are the equal. There is a massive difference between risks and foolish risks. Foolish risks essentially are those taken without doing any research, due diligence or taking any possible negative consequences into account. Don’t get us wrong, foolish risks CAN deliver positive returns – but the fact that you are entering a situation blindly and don’t know exactly what’s waiting on the other end, you are fundamentally rolling a dice. Calculated risks are backed by larger amounts of research and though the results won’t always be positive, enough homework will have been done to know if the chances of success rank higher than the chance of failure. Though we often shy away from risk for various reasons, understanding how to zone in on calculated risks will mean have no problem taking chances.
Tips for Taking Calculated Risks
1. Do Your Homework
It may not have been one of our favourite parts of being in school, but having your homework done is important to taking any calculated risk. You have to understand every detail and subtlety of the decision that you can. This allows you to discover any dangers or potential issues that may arise. Taking calculated risks is much like being a sports bettor. Contrary to the common belief that successful gamblers are just lucky individuals, they actually conduct lots of research and never make emotionally based decisions. Let’s just say a sports bettor wants to place a bet on a football match – a seasoned bettor would never just look at previous matches or a current league position and place a bet. They would always review picks from a handicapper of good repute and analyse the trends. As a startup CEO, you need to do the same thing. Even when taking a calculated risk, you need to enlist a trusted advisor, go over the number and negotiate the best deal. That wayou can ensure you’re taking a calculated risk.
2. Set Checkpoints and Goals
The end point of any calculated risk can be months, even years away. To stay the course of the inevitable process involved, you need to carefully identify and put into action checkpoints and goals. Goal setting is often discussed at length with focus either consciously or subconsciously revolving around long term or ‘end’ goals. Short term goals are often left by the wayside – and yet they are more important as they keep you on track. The path of any calculated risk is marked by several goals and checkpoints and they should be in place well before making a decision.
3. Foresee Mistakes
Before making any decision, consider the positive outcomes but pay particular attention to the negative ones. Examples of things you need to think about include ‘How would your business respond if the deal lost money?’ ‘If project deadlines are missed, how will you make up the time in order to meet them?’ ‘If partnerships are broken, what course of action will you take?’ Intelligent risk takers preempt potential mistakes and account for them. If you foresee too many mistakes, it probably means the risk is too high and you should consider moving in a different direction.
4. Accept that things will probably change
Business decisions rarely go exactly to plan. While you cannot always control whether the outcome will be better or worse than anticipated, you can control how you respond. Say the budget gets slashed significantly – slamming your head into your desk will more than likely doom you to failure. If, however, you’re willing to pivot, you’ll head back to the drawing board to find a solution. We often hear about entrepreneurs who took serious risks and found success but you rarely hear about what went wrong behind the scenes. In every success story, the decision makers are willing and ready to pivot in order to find success.
5. ‘No’ – It’s A Good Word!
Learning to say ‘no’ in your personal life and career is a fantastic skill to adopt especially when it comes to risks and opportunities. Jumping at every opportunity that comes across your path will leave you with no time or space to take the risks that have a high probability of succeeding. Psychologist, executive coach and speaker Camille Preston puts it perfectly – ‘Whatever the psychological back story, whatever the reason, the fact remains that saying yes to too many things is overwhelming and counterproductive. By saying yes to too many things we may, we may be saying no to some very important things. If your plate is too full, there’s no room for the unexpected or ideal opportunity.’
6. If It Feels Good, JUMP!
You’ve done your due diligence, run the figures, looked at what could go right and wrong with your risk…and yet you’re afraid to pull the trigger on your decision. That’s understandable and you wouldn’t be the first entrepreneur to feel that way. All we can say is, if you’ve done your homework and the water feels good so to speak, take the plunge. There comes a point when you have to jump in spite of the unknowns. Trust your instincts, rely on your research and with a bit of luck, it will all work out in the end.
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