When you launch a start-up you put everything on the
line. To this end it is important to ask yourself" “Can I risk this?”
Since risk is a non-negotiable when it comes to entrepreneurship, your
task is to identify your baseline—the level of risk that you are
comfortable with—then learn how to manage it.
Can you handle it?
Risk is defined as the potential that your actions could
lead to a loss; an undesirable outcome. When you establish a risk
baseline, it should serve as the basis for measurement of all other
actions surrounding your business. For example, the lowest possible
baseline could be “If I do X, and it leads to a loss, I won’t lose sleep
over it – I can handle it.” Here’s how to set a baseline.
• Develop a list of business risks that you’d like to take within the next 30 days.
•Next, assign a measurement of risk to each line item (Low, Moderate or High).
•Then develop what I like to call, an “I Can Handle It” column that denotes a) I can handle it or b) I can’t handle it.
Once you review this basic list, you’ll have a better idea of where your
risk threshold lies. Now that you understand your risk tolerance, it’s
time to manage it.
Risk Baseline
Now that you’ve identified and assessed your risk-baseline, you’re ready
to manage it. Managing it could mean a couple of things. You can a) do
nothing b) transfer risk or c) minimize risk to ultimately take your
results from undesirable outcomes to more desirable situations.
When faced with risk, most of us do absolutely nothing. However, inaction is also a choice that will affect your business. As a rule of thumb, you can control one variable in your business: you. Decide how you are going to manage the risk you’ve
outlined above. You can do one of three things:
•Minimize and reduce risk by creating a backup plan (Plan C) for the backup plan (Plan B).
•Transfer risk by outsourcing internal operations to highly
qualified and specialized third parties with a vested and monetary
interest in getting it right the first time.
• Or accept the risk. This means preparing for a loss and develop safeguards to ensure a gain.
For instance increase the dedicated resources, such as money, staff
and time to a specific project and cutting back focus in other areas.
Just because something sounds good, looks good and feels good doesn’t
make it a worthwhile risk. Pay close attention to
the opportunity, the risk and the reward. Don’t take blind risks.
Calculated and deliberate risk taking is essential to the growth of your
small business. Information and action are the key ingredients to
increasing your risk tolerance. Team up with people that have the information or
skill set that you need.
