Risk-taking is scary. But, it’s hard to grow without taking them. So, what are the top calculated risks tips for growing your small business? Read on and see to learn more about what calculated risk is and how to deal with it.
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Defining Calculated Risk
Calculated risk means clearly outlining where hidden risks lie and having some sense of the degree and magnitude of those risks. We’ve used this simple, but effective tool to help guide us when we evaluate an opportunity:
Our Top Tips!
Before taking any major risk, we recommend these three simple tips. They will help you complete the chart above.
Before deciding, it is a good idea to do some research. You’ll need this data to help you assess the likelihood of a risk occurring, and what the true downside might be. It can also help you with uncovering steps to mitigate the risk if something does happen. Don’t go crazy with research, but at least take a little time to understand the probability, cost, and how you might manage the impact. Otherwise, you might not be ready to grow when the time comes.
Phone a friend
Humans are by nature bad risk-evaluators. We tend to give more weight to things that are familiar and give less weight to those that are common. A classic example is shark attacks vs. car driving. Most people fear getting attacked by a shark when it’s significantly more likely that they will be injured in a car. Therefore, it’s a good idea to pull in another knowledgeable party such as an advisory board or another kind of friend to weigh in on how you rated your risks.
Don’t Forget Your Mitigation Steps
Risks are less scary if you have plans in place to deal with them. Developing mitigation steps during a crisis is never as effective as creating them with a calm mind. Always ask yourself, what can I do if this happens? If l lose a client, what could I do to make up the difference? If I lose capital, how can I recover? And more questions like this.
Calculated Risk Is a Part of Growth
Everyone has experienced risk in some fashion. It’s how you deal with it that matters. If you have taken the steps above, I can guarantee you will be more prepared to deal with them. I can also guarantee if you don’t any risks, your chances of growth are very slim.
At ProStrategix, we know you have concerns. We’re designed to help give you the business support you need so you can focus on doing what you love. If you would like to learn about how we might be able to help you, please contact us.