Failure isn’t an option.
But sometimes it is ok. Especially if it’s a ‘smart failure’ experienced after taking a ‘smart risk.’
It is risky to start a business. Many entrepreneurs quit a job that offers security and a decent salary to go into the unknown. There are no benefits, no compensation and no deposit.
They do it because they’re entrepreneurs. Entrepreneurs conjure up images of fast-moving and fast-talking heroes who make big money. So it’s no surprise that entrepreneurs don’t mind taking risks.
While big companies can take more significant risks with large budgets and fewer limits on their resources, entrepreneurs are more vulnerable – especially start-ups. A small business cannot grow or compete with big companies if no risks are taken.
The question isn’t whether or not to take a risk, but which risks are worthwhile and which are not? These are some things to consider when deciding the type of risks you take with your business.
Do your research (but not too much)
While you want to get a sense of the potential outcome based on factors like customer demand, competition, and staff, you don’t want it to be so complicated that you become immobile. Overthinking and over researching things can lead to decision paralysis. It would be best if you went into your decision with knowledge and confidence. However, depending on the stakes at risk, spending too much time planning can cause you to talk yourself out of moving forward. The proverbial leap of faith is often needed when something feels risky.
Consider All The Angles
Consider the angles. Financial risk. Reputation risk. The potential return on investment. Growth opportunities. What is the worst-case scenario? The best-case scenario? It is essential to estimate the impact of risk on your business. Play with the numbers and create multiple scenarios. What if you only get 10% of what you want? Is it possible to get rid of excess inventory and still make a profit? What if the demand is 200%? What if you can meet the demand?
Talk it out
Be sure to discuss the decision with other trusted people. They will help you consider different angles or unintended consequences (or benefits) that you didn’t think of yourself. Each time you get a response about your solution or idea – positive or negative – you should evaluate it carefully. If you hear someone say your idea is terrible and only a small part of you agrees with it, take that apart and examine whether it is true. Smile and continue to move forward if someone tells you something you have already considered and factored into your decision. Be cautious of those who think everything you are doing is fantastic; they may not want to hurt your feelings or discourage you. A great place to find unbiased people is to join chat/forum groups for entrepreneurs or people who work in your niche. They don’t have any vested interest in not hurting your feelings (but watch out, forums have trolls).
Jump In With Both Feet
Once you have completed all the steps, you can get a clear idea of your next move. You’re ready for the next step. Make sure you are 100% committed. If you still have doubts after going through all of the steps, take a deep breath and try another idea to see if your original idea comes back. If not, it might be time to start over and rework these steps.