For many businesses, the risks associated with certain actions are avoided at all costs. While this may be true, some risks are worth taking because it could eventually lead to potential business growth as well as gaining a competitive edge. Some calculated risks, which are based on a balance between the probability of failure or success, can be considered to be good business decisions. The calculated risks you choose to take may be what improves your small business potential and puts you above your competitors. Here are what some experts believe to be six good calculated risks for small businesses.
1) Build a product line instead of a single product. Having one good product may get your business started and get your name out there, but it isn’t going to last forever. In order for continued success in your industry, building a product line is the best way to go. Offering your customers an option in products can be one of the best calculated risks you take.
2) Develop and implement a new business model. If your old products or services aren’t selling as well, you are going to have more success by implementing an entirely new business model, rather than trying to market your old products, or advertise them at lower prices. Customers want what’s new and fresh, and sometimes this involves creating an entirely new business model.
3) Spend cash on marketing and advertising. Not only is it recommended that you invest money on proper marketing and advertising for your business, but it’s practically required. If you want increased business growth and potential, you have to reach a wider audience. Word-of-mouth only gets you so far; take the time to learn what your potential customers are looking for, and seek out advertising methods within that market.
4) Partner with a competitor. Businesses are often surprised that partnering with their competitors, rather than striving to beat them, will improve their business exponentially. By choosing to partner up, both you and your partners businesses stand to gain a market advantage, which call also lead to additional sources of funding, and lasting business relationships.
5) Hire good people, even if they’re expensive. The old adage that you have to spend money to make money continues to remain in the business world. If you want to earn more money in your business and increase your customer base, you may have to spend a little more for the right people. Whether it is your graphic designer, advertising expert, or financial advisor, individuals whose rates are higher, tend to have a better reputation and do better work.
6) Be a leader, rather than a follower. As a small business owner, you may find it tempting to simply follow in the footsteps of businesses that inspire you, or are doing well in your industry. Being a follower may get your business started, but it won’t help you last or become widely successful. By choosing to be a leader and putting your natural entrepreneur spirit to good use, you can develop a brand new product that makes others want to follow you.
Forming and operating a small business is no easy feat, and takes a lot of planning, determination, and vigilance. Sometimes what you need most of all, is to throw caution to the wind and take a calculated risk.