One of the biggest issues with small businesses is that they’re unwilling to take risks. They’ll follow in the footsteps of their competitors and larger companies, only to realize that they’re not making much progress five years down the line.

In most cases, it’s understandable why businesses refuse to take risks. Calculated risks are difficult to find, and opportunities usually come with very troubling downsides. A lot of business owners like to have that guarantee—a safety net that if their calculated risk does fail, they still have a business and they can still stay on their feet.

However, there comes a point when all budding entrepreneurs will realize that they can’t stagnate their business anymore. They can’t simply follow other businesses no matter how safe it seems, and getting out of your comfort zone is one of the most effective ways of establishing your own brand.

Taking risks can be seen as gambling, but with proper management and forecasting, taking risks is perhaps the best way to grow a business. If you’re still unsure about how taking a risk can be beneficial to your business, then here are a couple of considerations to keep in mind.

Does Failing Faster Work?

The obvious downside to taking risks is that they can backfire. If you take a risk that ends up costing your business a lot of time, effort or money, then you might find yourself struggling to pull yourself back up and, as a result, watching your business collapse in front of you.

This is sadly one of the realities of being an entrepreneur—you have to fail in order to gain experience. If you aren’t constantly looking for ways to improve yourself and stepping out of your comfort zone, then it will be difficult to grow as a business owner.

If you’re serious about growing your brand, then you have to understand that failing is a natural part of gaining experience. When you fail, you learn from your mistakes and build up resilience. By learning from mistakes, you can avoid future risks and scenarios that are unfavorable for your business.

Failing faster might not work for everyone, but it’s a sure way to gain more experience and insight into the world of business.

All Entrepreneurs Take Risks

Every entrepreneur has to take risks in order to grow. Even the most successful entrepreneurs of our time have failed several times before they gained success. In some cases, what they learned wasn’t that their idea was bad, but the timing of it wasn’t right, the industry was too young, or the world wasn’t ready for change.

For instance, Jeff Bezos, the CEO of Amazon, has failed a lot in the past and many of his previous ideas were very similar to Amazon. He has tried to invent many new ideas, but the core of his inspiration is in his failures. Among hundreds or even thousands of failures and iterations, you will eventually find something that works for you.

Even if it means losing a lot of money, time or even a part of your sanity in the process, there’s no point trying an idea if you know it’s going to succeed.

This is where most people get business wrong. By attempting an idea you know will work, you’re tapping into a goldmine that’s already been plundered by other companies. If you want to be a business that innovates and creates new ideas, then you have to be willing to venture into unknown territory.

Be it a revolutionary new idea, remaking something that’s been forgotten or just doing things better than others, you have to bring something new to the industry if you want to be a successful entrepreneur.

Everyone Instinctively Takes Risks

Risks are something that we all take on a regular basis. Just think about your business—did you not invest a chunk of money to make it grow? Did you not pour your savings, hard work and time into growing a business from scratch? That in itself is already a risk that you took, so why would it be any different for other parts of your business?

The fact is, people take risks all the time and business owners instinctively have to take risks if they want to make something of their investment.

Risks are a natural part of life. We weigh up the chances of success in our head and we also make backup plans to counteract the negative effects of a risk. For example, let’s say you’re a semi-successful startup that’s looking to branch out and take advantage of their profits. Your two main choices would be to diversify or specialize.

By specialising your products, you tap into a niche crowd to gain a stronger hold on the industry. If you diversify, you risk losing your niche audience in favor of a wider one. This is just one of the many decisions that a business owner has to make, and it’s something that should come instinctively.

It’s a hard decision to make and they both come with inherent risks, but it will come naturally as a seasoned business owner.

Risks Grow Your Business

Taking risks is an important part of growing a business. As mentioned in the previous section, risk taking is paramount when it comes to difficult decision making. Almost every major crossroad that a business arrives at will come with risks and issues that have to be solved in order to grow the business.

Let’s use another example. If you’re trying to break out of the startup circle and become a fully-fledged business, then one of the things on your mind might be investing in a factory. Factories allow the business owner to have more control over the production process, but factories are hefty investments that require a lot of money.

Once you’ve invested in a business, you also need to think of the machines and staff required to run it. For example, powder coating systems are essential to coat objects with paint, and you can see here for more information. You’ll also need robotic arms to work on production lines, and of course, managers to operate the factory.

It goes without saying that a factory is an expensive investment that requires a lot of thought and planning. It’s a risk that very few businesses manage to make work in their favor, but it’s one that will pay off assuming you can stay in business long enough for the factory to be worth it.

Learn When to Task Risks

However, there are times when taking a risk isn’t the smartest decision. For example, if you’re trying to break into a niche or gain exposure as a small business, then it makes sense to do something out of the ordinary to receive more attention. One popular example of this is in the gaming and movie industry.

You’ll see plenty of video games from popular developers such as EA and Activision that are simply rehashes and sequels of popular titles. This is because they still sell and those franchises make those companies a lot of money.

Similarly, it’s why there are so many movies that follow similar patterns and genres, and there is very little experimentation when it comes to mainstream entertainment.

Small studios can’t compete with the overbearing nature of these large corporations, which is why there’s an “indie” scene in creative industries. These smaller companies need to do something strange, new or interesting in order to get noticed.

They’ll develop new ideas that eventually trickle into the mainstream because they’re proven to be successful or popular ideas. The larger corporations adapt it to their own needs, and the cycle starts over and small businesses need to innovate once more.

It’s a strange cycle, but it makes sense to watch other companies test new ideas if you have hundreds of employees and millions on the line. Taking risks isn’t as important when you have a huge following and a lot at stake, especially if you can keep doing what you do and still turn as profit.

Risk taking is more targeted towards smaller companies that are trying their best to break out and get exposure.

Have a Backup Plan

Lastly, you need a backup plan. This was briefly mentioned before but in less detail. You need to always have a backup plan ready because if your risk doesn’t pay off, you could be left without a business or you might lose a lot of market share. In order to accept failure, you have to learn from it.

That should be the first thing on your backup plan: to learn from your mistakes and analyze what went wrong and how you can fix it.

If you’re still in business afterwards, you can use that knowledge to revitalize your strategy and try again.

However, if your business is failing, then it’s time to call it off and start over again. You need to have a way to get back on your feet if your risk failed, and it’s a plan you need to think of early on before you even consider weighing up the options.

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