Doing business is nothing new; people have been doing business since the dawn of time. Entrepreneurship is a new type of it where you are thoroughly researching different ideas and market trends to create a successful business.
But the one thing that you always have to keep in mind that whether you’re a traditional business owner or an entrepreneur, you have to embrace the fact that you’re going to have to take a lot of risks. And if you’re not up for it then you’re not capable of running a business.
Entrepreneurs are changing the world every day. Why? Because they love taking risks to promote their business and they will stop at nothing to get make their product or strategies more successful.
However, when we talk about taking risks, we mean calculated risks. That means that if you have a parachute, you’re still prone to death but it’s a calculated risk if you jump off a cliff. But if you jump off a cliff hoping to sprout wings all of a sudden, then that’s just a stupid mistake.
Entrepreneurship is a very calculated process where you have to look at tons of statistics before you even consider spending money on an office and other stuff. There’s a lot at stake and your investment will be wasted. When things can go south so easily then why do entrepreneurs take risks? Let’s see.
Why Entrepreneurs take Risks?
Every Business involves Taking Risks
Risk-taking is very closely linked with the concept of entrepreneurship. Well starting off with the mindset of becoming an entrepreneur, you always have to leave a steady-paying job to start your own business which may or may not pan out as well as you initially hoped. You need a devoted mind for that.
Secondly, you have to realize and come to terms with the fact that the product you want to sell doesn’t even exist yet. The quickly you wrap your head around that reality the more it’ll shield you from any sadness that comes your way when you focus on selling your product and it doesn’t work out that well.
On top of it all, you have to employ a bunch of different people that have to love your product as much as you do in order for the company to be successful. All of these factors are risks and they can take a toll on anyone if they are not up for it.
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Risks should always be Calculated and not a Bunch of Random Gambles
According to different studies around the world, entrepreneurs are not just a bunch of random guessers or gamblers, they are calculated risk-takers that are knee-deep in research all the time.
This research, in turn, helps them gain knowledge about the market they want to be a part of and prepare them for any damage if the risk they took doesn’t pan out the output they desired.
Risk-takers are more Content and Satisfied
According to studies, most people are never willing to take risks because they’re just too afraid of things out of order. Entrepreneurs are not like that. They like taking risks so much that they have to take risks in order for them to gain any type of satisfaction concerning their work.
Risks are the Best Teachers
In the world of business, not every strategy pans out. There might come a time that you become so depressed that you want to close up shop just to breathe a little. Before it comes to this, you need to fully understand that every risk not panning out is a blessing in disguise.
How? Well, you will always learn from every failure and you need to re-iterate your strategy to stay afloat and make your business a success.
What types of Risks do the Business Owners take?
As we mentioned earlier, every type of business activity involves some sort of risk-taking. The following are some of those risks:
- Market Risk: This type of risk is faced by investors when there are any possible fluctuations in the market. To get ahead of them, entrepreneurs need to adapt to many different strategies. This type of risk is also called systemic risk
- Competitive Risk: This risk is faced by the business owners when there is a possible loss to the business due to price, product, and marketing practices of competitors
- Credibility Risk: Whether the business is new or old, credibility matters. Entrepreneurs often face this risk when they are starting out. But if they devote themselves to produce the best product, then this issue goes away
- Technology Risk: This risk is faced by the business owners when there is a failure in the technology that their company is relying on
- Financial Risk: Money is everything in the business world. This risk is faced by the business owners when the cash flow of the company is not able to meet the financial obligations they have promised
Benefits of Risk-Taking
According to studies, Risk-taking has two major benefits. They are:
Risk-Takers already have a Competitive Advantage
Most of the business owners all over the world are severely afraid of taking chances and risks that may affect their steady functioning business. These are the people that never let their business grow and reach their true potential.
When this is the norm, entrepreneurs have the best possible competitive advantage they could have asked for. Because they are the ones taking risks and successfully maximizing the output of their company.
Risk is Closely related to Opportunity
Customers have increasingly carrying demands that normal businesses can’t hope to fulfill. It always comes to the innovative thinking mindset which fulfills the demands of the people they didn’t even ask for.
Take the example of Apple; they took out the headphone jack when their iPhone 7 was launched, and the whole tech industry bashed them for it. Who did you think won that battle? Well, when Apple did that, the demand for Wireless headphones skyrocketed and the companies, who were against them, took away their own headphone jacks too. You do the math.
Being a Businessperson you can never expect the market to remain the same. There will always be different aspects of the market that will make you choose between taking a risk or risk losing the business in the long run. Take some risks. It’ll help you to look at the world of business in a whole different way.
Originally published at https://www.ntaskmanager.com on March 4, 2020.