Taking risks can be the difference between a thriving business and one that remains stagnant. This usually happens if an owner is afraid to risk any change, growth, or innovation. However, that doesn’t mean you should jump into risk without a definite plan. An entrepreneur only assumes calculated risks, those in which there is a good chance of success.
There comes a time in the life of every small business owner when you have to take some risk. Do you want to increase your customer base? If so, it will require the risk of investing in marketing.
Do you want to increase production? This requires the risk of opening a credit line at the bank. Without risks, there is no growth; many successful entrepreneurs had to take them at some point to build the megacorporations they now run. However, it’s important to make certain considerations before embarking on your new investment.
Start Small
Starting small is the best way to ensure you’re ready. If things don’t work out as planned, at least it was a slight change. Before taking any risk, carefully analyze all the variables, identifying their pros and cons. If you have the idea of launching a new product or service, do some market research, listen to your customers’ opinions, and identify the competition that you will face.
It’s also important to set specific goals concerning the risk you intend to take: how much investment you will have to make, how long you plan to recover it, etc. Set reasonable dates for meeting goals and assess whether you are willing to take that risk and whether it’s worth it. You may need to go back and set more concrete or realistic goals before moving it to practice. The important thing is to make sure the risk contributes to long-term success.
Talk to Employees
A risk won’t pay off unless your employees support the decision and are on the same page. If you set your goals and objectives in the previous step without talking to your team, it’s better to go back and start over. When taking any risk, you must have the entire team at your side.
This is also a good time to assume the role of a leader. Not as an authoritarian figure, but as someone who knows how to communicate. There are several ways to communicate to your team that the company intends to take a risk:
- Explain Your Plans Clearly– Rather than making rounds or flourishes, try to be clear and confident when communicating your plans. The clearer it is at this stage, the more prepared the team will be to face the challenges with you later.
- Be Positive– If you appear to be tense when communicating your plans or insist on highlighting how difficult and laborious it will be, your team might get stressed. A leader remains calm in the face of the most challenging situations and is ready to deal with crises.
- After Speaking, Listen– Talking to employees shouldn’t be a monologue. You must transmit messages clearly and listen carefully to the team’s comments and suggestions, showing them that you care about feedback.
- Set an Example– The business is yours, and you are its representative. Show your team that you maintain the same practices you are demanding of them. To lead, set a good example.
Find Insurance
Insurance is necessary before making any business decision. Having a general liability insurance, for example, can protect small business owners from claims of property damage, bodily injury, and advertising injury. This can happen if your business or services harm third parties or their property, or your ads are accused of plagiarism or slander.
Workers’ compensation insurance helps in the case of work-related injuries or illnesses and covers medical costs and wages from lost work. If you intend to purchase a fleet of cars for the company, you should consider commercial auto insurance, which helps cover the costs if you or your employees get involved in an accident. Find the right policy to meet your needs and staff size.
Keep in mind that some factors impact the cost of small business insurance. Your line of business (what you do or sell) can increase your liability risk and consequently raise the cost. The same goes for the area where your business is located (if there are frequent reports of theft or vandalism) and your history of claims. However, the costs can be much greater in the end without any form of insurance.
Learn from Mistakes
It is not always worth taking some risks. Some business owners can leave the experience frustrated and even traumatized because it didn’t work. Others can face the experience more optimistically and accept failure as an opportunity to grow and learn.
If an incident happens, remember to keep detailed reports of all errors or budgeting mistakes. By accepting failure and analyzing these reports, the mistakes can teach you how to think and plan more effectively next time. You can even use this material to ask for help from professionals in the same field.
Taking Risks is the Key to Evolving
Risks are directly linked to opportunity. Taking risks can be seen as a challenging step for the professional growth of your small business. The whole process can be a bit scary at first, but making challenging decisions is critical in any company that doesn’t want to remain stagnant.
Don’t be afraid to take calculated risks and remain cautious to get the best results out of the process. Remember that if you choose to stay in your comfort zone and take no risks, your competitors may think differently and invest in some new product or innovation, beating you to the sales.
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