Small business owners are, understandably, wary of taking risks. In fact, 68% of small business owners say that they never, or only occasionally, take risks. After all, starting up your own company is such a huge risk in the first place, they’re hardly going to want to do anything that has the potential to ruin it all.
Unfortunately, taking risks is the only way your business is ever going to grow. As Mark Zuckerberg once said, “the only strategy that is guaranteed to fail is not taking risks.” You cannot simply sit there and expect your business to develop on its own, you need to actively work on it and that involves taking risks every now and then.
That doesn’t mean that you should take every opportunity that comes your way, though. Not every risk is worth it and some are more uncertain than others. So, how do you pick and choose which ones to go for? Here’s a collection of tips to help you make that decision.
Gather as much Information as Possible
When faced with a new opportunity, before you do anything, you need to be informed. Take the time to figure out exactly what is at stake and what the potential gains are. This way, you can decide whether the positives outweigh the negatives or not. You should also try and find out how likely it is for this to work out the way you want it to. Is this something you’ve done before? Has anyone you know done it before? Is there any statistical data available that might let you know your chances?
For example, if you’re thinking about buying some advertising space in a local newspaper, ask if they have any information on how many people buy the paper so that you have a better estimation of how this could boost your sales.
Establish a Risk Base Line
What is the minimum that your business requires to keep running? In other words, what would you never ever risk, even when there’s a 99% chance that it’ll work out? That’s your risk base line. That’s the point when you know an opportunity isn’t worth it. If you can figure out where this line is for you and your business, it makes it much easier to know which risks could lead somewhere and which are not even worth considering.
Keep Your Overall Goals in Mind
Similarly to the above point, as well as knowing what you would never risk, you need to know what could make a risk worth it. Think about where you want your company to be, would this bring you closer to that goal or take you further away? Is it’s Likely to turn out the way you would like it to or whether you’re more likely to lose something from this situation.
Providing discounted flyers for a local charity might not get you any profit but, if you’re allowed to include your name and logo in one corner, you may get a boost in clients from people who received that flyer. If expanding your client base is on your wish list then this risk might be worth taking.
Don’t take Risks when Emotional
This might sound obvious but needs to be said even so. When you’re feeling an extreme emotion, be it a happy emotion or a sad one, you’re much less likely to think objectively. Taking a risk with your business is a very serious issue and not one to be taken lightly. You need to ensure that you’re in a clear state of mind and have fully considered the consequences before you say yes to a new business venture.
Prepare for the Worst
There’s a reason people don’t like taking risks; while there is a chance that things could turn out very well, there is also a chance that things could go badly. People tend to be pessimistic about risks at the best of times and although you don’t want these negative feelings to stop you from ever taking a chance, there’s no harm in having a back-up plan or two.
Knowing that you have a plan B can help dissuade any panic that you’re feeling. Even though using your plan B means that things haven’t turned out in the way you hoped, at least you still know what your next move is. This is especially important if you have any employees who will be looking to you for leadership.
Talk to Others
Nobody ever said that you need to make tricky decisions on your own. If you’re not sure about something, ask someone for their advice – friends, family members and, if appropriate, colleagues. It always helps to get someone else’ perspective on a situation because they could point something out that you’d not even thought of. Maybe they’ve done something like this themselves and you could learn from their experiences.
Even if they have nothing to say on the subject, the act of talking through an idea can help you decide whether it’s a good idea or not. There’s something about having to break something down for someone else to understand that lets you see the finer details of a plan and any flaws that lie therein.
Have you ever considered taking up SMS marketing for your print shop? It might not be as risky an idea as you think. Read our blog on why SMS marketing could be just the thing you need and discover 7 ways you could incorporate it into your business plan.