In the world of business, risks are many things. Edgy. Smart. Terrifying. Necessary. Without risks, without breaking free of your comfort zone and trying new things, your business has little room for growth. That leaves stagnation or decline on the table and no one wants that.
Small business owners often feel the pinch, not to mention the stark terror of risks more keenly than larger organizations, but that doesn’t mean you can afford to skip them altogether. The key, is to learn to take smart risks instead by doing these things.
Gather data. Identify costs and benefits to your business and measure against the potential loss for your business if the risk doesn’t pan out in your favor.
Consult with the proper experts including attorneys, accountants, insurance agents, and trusted advisors in an effort to minimize your risks and limit your exposure. Have the facts on your side necessary to make an informed decision on the risk v. reward value involved.
Establish Acceptable Losses
Have a line in the sand for your business as far as what is and is not an acceptable loss and avoid risks that would cross that line. Whether it’s a dollar amount for the costs, the insurance risks to your business, or something else, you need a line that lets you know this risk is likely outside the bounds of what is best for your business.
It seems simple enough, but this one takes a little work. You must be armed with all the facts about the risks in order to do this adequately.
Allow Margins of Error
Perfection is not a possibility. Things go wrong in the real world. You have to have a little wiggle room to allow some of these things to go wrong. That way, one wrong move, misstep, or mistake will not sink the entire project. If you’re looking at a risk that requires flawless execution in order to work, then it’s probably not one that would qualify as a smart risk for your business to take.
Could it work out? Possibly, but history and statistics heavily favor a negative outcome and that’s something you should carefully consider before moving forward.
Resist the Temptation to Play the Blame Game
Perhaps the best thing about smart risks in business is that they force you to move beyond your general comfort zone, stretch your limits, and try something new for your business. Even if it doesn’t work out the way you’d hoped it would there is value to gain from the failure just as there would be from the success. Don’t try to place blame. Instead look for lessons to learn from the experience and explore new risks, armed with the new knowledge you’ve gained.
Risks are an important and necessary part of business. Even though you take great care to reduce the risks to every possible extent, it’s best to hedge your bets with adequate business insurance to protect against unforeseen or unexpected risks.