Risk takers in business – Low vs High risk?
Having my own small business of which I am quite proud of plus my online endeavors PLUS all the personal development my lady enrolls me into I come across the words Risk, Risk Taker and Return on Investment quite regularly. All the business related development material often mentions what kind of return I can get on my investment or my time. How I should or could leverage my time more effectively and how I should be working on the business not in it etc etc. Will I receive back 10 or 20% returns?
I am fascinated by the correlation between growing a business and taking steps forward in your journey and the comparison to the risks involved. I am sure you are familiar with the line High risk = High Return and obviously the reverse of that with low risk = low return.
Taking steps forward can mean risk
Anything in business can entail a risk. Will I make a profit from this?. What can I lose from this project? Do I have enough customers or sales? How people deal these questions decides on their business strategy, their financial plan and where they are leading their business. One of my online ventures is some web development / project management / website help (its a broad field) and I regularly need to evaluate what investment is required compared to what my expectation on return is. I also need to factor in a fall back plan or exit strategy in case the project doesn’t work out. No reason to be a risk taker without having financial reward or I might as well place my money in a bank and expect the measly 4% interest (with inflation and potential bank fees means I am actually going backward!)
Experience has shown me growing your business and taking steps forward means weighing up all the choices and making smart choices and decisions. It has also taught me not to be afraid to walk away from a deal. I was looking at a purchase not long ago and something about the deal just struck a wrong note with me. I walked away and was proven to be quite right no longer than three weeks later that the figures didn’t work and there were some holes the owner was trying to not show. Cant say I am the best of risk takers in business but I am happy I have a good intuition when I listen to it!
Risk taker or stuck in a rut?
I mentioned above no risk is most likely going to equal no return and would like to refer to that from now on as stuck in a rut. A stuck in a rut person may still be working 9 – 5 in a job they don’t like or a business which simply exists to pay their salary (if their a small business owner). One concept I was introduced to last year was lifestyle versus finances.
- Whats the point of being stuck in a rut in a job you don’t like which creates a lifestyle you don’t want?
- Whats the point of running a business which creates tensions stress and some risk if you dot feel this business will improve your lifestyle?
I personally cant help but feel risk takers in business are the ones who make educated decisions and make viable plans (along with a fallback out exit position) and take smart risks in order to move their business along.
Moving out of your comfort zone and starting a business or for those already in business taking risks is the only way to move any business forward. I have a line on my wall which reads “Inching forward is not going backwards” and as all business owners can agree I am sure you never went into business to make a loss or go backwards financially.
What kind of business owner are you? Risk taker or Stuck in a rut doing the same thing every day?
Want to get an idea of planning before spending to minimize risk? Try our article on practice investment accounts.
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***Photos thanks to Howardlake & Lizasperling***