Talk to any business owner, and you’ll realise that success doesn’t ever come about without its fair share of risk. We’ve all heard the stats: a whopping 60% of start-up businesses will fail in the first three years of operation, and of that 60%, just half are profitable. Clearly, the very idea of launching a business is, in itself, a risk.
The key is to learn to recognise the difference between an oversized risk and a smart risk. As a business owner, you must learn to quieten the parts of your ego that might encourage you to take oversized risks, and instead seek out the smart risks that won’t completely obliterate your balance sheets should things not work out.
Smart risks could be anything from acquiring a new business to hiring a graduate with the intention of training them up. There’s a chance things could go awry, but in most cases, the reward outweighs the gamble. This often overlooked skill has helped me achieve 988% earnings growth in my business, SMARTECH, since 2016.
So, if you’re keen to start taking smarter risks, here are the five steps towards getting those all-important rewards.
Research your risks
The first step is easy to skip right past, but it is one of the most important on the list. Before you take your calculated risk, take the time to study the market, understand consumer behaviour, and gather data on your competitors.
Use this data to make an informed decision about which risks to take and which to avoid, rather than going with your gut alone. Now is the time to think with your head, not your heart (no matter how strongly your heart might be telling you to go for it!)
Put a plan in place
Your risk plan should include a clear goal, a roadmap for achieving that goal, and a contingency plan in case things go wrong. By putting a clear plan in place, you will better minimise the risk and increase the chances of success – and stop you laying awake at night, worrying if you’ve made the right decision.
Stay flexible
Smart risks mean being flexible. If you refuse to adapt when market conditions shift, you’re far more likely to fail. Going back to the example of acquiring a new business, it might be necessary to extend the timeline or add extra training for the new members of staff. Being flexible isn’t a failure, in fact, it’s the only way to avoid failure.
Put a strong team in place (and think like Goldilocks)
With any risk-taking exercise, a strong team is essential. Select a team with a diverse range of skills, experiences, and perspectives to provide valuable insights and ideas and help mitigate potential risks.
Make sure your team is also aligned on the difference between oversized and smart risks. Take a leaf out of Goldilocks’ book and select people who are ‘just right’: neither too risk-averse nor too risk-loving. Finding the sweet spot is the key to risk-taking success.
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Align your risks with your values
Finally, businesses driven by a clear mission and values are often better able to recognise risks that align with their goals and beliefs. If you’re fuzzy on your organisation’s values, take a step back and remind yourself of the bigger picture. You’ll find that if you’re staying true to your values, the smart risks will be obvious.
Taking risks is a crucial part of doing business, but bigger doesn’t always mean better. Instead, focus on risks that are well-researched and planned, supported by a strong team, and aligned with a strong sense of your business’s underlying values.
By Vincent Nair:
Vincent Nair is the CEO of SMARTECH Business Systems.
SMARTECH Business Systems is a global industry-leading channel partner for a range of businesses in the print and communications industry.
Nair has led the growth and turnaround of the business from a loss-making enterprise in 2016 to 988% earnings growth in 2022. Under his leadership, the company has had a significant compound annual growth rate (CAGR) of 61% over the last six years.
