Entrepreneurs are risk-takers. This is why many people don’t dare to start their own businesses; they are too afraid of the risks involved. It may be safer to stay in the corporate world and earn a guaranteed monthly salary but that way you will never realize your true potential and what could happen if you go out on your own. Nothing was ever gained without someone taking some sort of risk. That is why when the stakes are high, the rewards (and possible losses) are also high. Taking a risk is like proof that you believe in your ideas, are passionate about them, and willing to see them through no matter what. You just need to be able to calculate risks and choose wisely regarding what types of risks you’re willing to take. Although there is no fail-safe way to know if taking a risk is worth it, the more experience you gain, the better you’ll be able to predict whether taking a risk is worth it or not. For example, you may be awarded a year-long contract to produce certain goods/services. In order to meet the contract’s demands, you may need to take out a loan for expenses. If you are successful, it will be no problem paying back the loan, but you still run the risk of taking out debt and having to pay back that debt even if things don’t work out. You can evaluate that risk by weighing the amount of debt against the certainty and potential gain involved in the contract.
There are also risks that you cannot control. Do you still remember the recession happened in 2008? I started my company just a few months before it happened, and I still can’t forget the many sleepless nights when the turmoil started to affect almost every country. People lost their jobs, and the stock market plumped. Customers cut their orders but bills kept coming. There were a lot of times that you just didn’t know how long you could survive, no matter how passionate you were about the business. As a Certified Public Accountant, I was taught to somewhat risk-averse so I was able to weigh the pros and cons in any decision. During that difficult period, I cut down all the unnecessary spending and looked for any potential business opportunities with the bare resources. As the old proverbs say, “cash is king” – I also disposed of some of the stocks as this global turmoil was really scary. I did learn a lesson after the global financial downturn. Owning a business is not always as glorious as you may think. There are always times when you must accept the reality that some things are just out of your control. You have to be willing to deal with the possibility of failure. So no matter what you plan to do, give your best effort, hope for the best, but at the same time prepare for the worst too. As an entrepreneur, you will have to manage the money wisely and see every adversity as an opportunity.
What’s more unfortunate is, in this competitive world, we are not only facing risks arising out from economic fluctuation, but also market conditions, new products, and even political environments. All of them can create different levels of risk for your business. In order to mitigate the risks, what you have to do is to constantly review the business environment, do your own research, and understand your strengths and weaknesses as well as that of your competitors.
Nina Simone is an icon in music, particularly Jazz. In the early 60s, a friend of hers arranged for her to get a job in Atlantic City, New Jersey. She traveled north from home and arrived only to discover that the club owner had expected a singer, and at the time she was just a pianist. He told her that if she wanted to keep the job, she’d have to sing and asked if she could sing. She’d never sung before but she knew one song so she risked embarrassing herself even further and being sent back home, but she took the opportunity and sang that song. The rest, as they say, is history.
Some risks are easier to evaluate than others. With some you may even need to risk it all, jump into the deep end and swim.
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