Risk taking is a part of any business, yet there is a thin line between a smart risk and taking an unwise chance. While some business owners often hear the word “risk” and shrink back, assuming possible loss and danger are imminent, others see a risk as a chance to gain more and making it big. Some risks are just plain stupid because more bad can come from them than good. They are typically obvious ones you should avoid at all costs. Smart risks, on the other hand, have upsides that significantly outweigh the pitfalls. How do you know which is which?
Before you learn how to make a choice about a potential action, you need to understand what constitutes a smart risk for your business. In general, you want to take risks that offer potentially limitless benefits with few downfalls.
Consider an online business. You may have a small but steady following, and you may be wondering if you should optimize your website to achieve more traffic. Now, if you spend a couple hours out of your day to make some changes to the content, you may be losing money because you could have been earning income during that time instead.
The risk is that you could find your changes did absolutely nothing or it could significantly decreased the traffic. Of course, the risk is small, and if it does happen, you can go back in a few days and put it back the way it was, or figure out what went wrong and make the improvements work. On the other hand, your changes could drive more traffic to your website. The possibility for increased income outweighs the chance that you will get fewer visitors to your site. You would be a fool not to take this risk.
Branch into Other Services
Other smart risks involve branching out into related services. Approach your best customers to find out what other services they might need. If you already do carpet cleaning, will you customers benefit if you invest in an upholstery-cleaning machine? If you find a handful of customers who express a strong interest, rent a machine and try adding the service. If it works well, it’s time to consider buying a machine to maximize profits.
How to Take Smart Risks
The key to success when taking a risk is to look ahead. While some business owners think about the next few months or a couple years down the road, the smartest thing you can do is to look over the next few decades. If you feel that the changes you want to make today will have a positive impact even after so many years, then the risk is definitely worth the taking.
This is not to say that every risk you take will be a success; many business owners find themselves falling flat on their faces repeatedly. However, the important thing to remember is that the number of fails should be significantly fewer than the number of successes.