Everyone seems to have their own “Top 10 list of entrepreneurial qualities” these days, and risk-taking almost always makes the Top 3. But is this really true? Do savvy entrepreneurs simply throw caution to the wind and fly in the face of danger when it comes to taking risks?
Let’s examine this “myth of entrepreneurial risk-taking” more closely.
As entrepreneurs, everything we do has both an upside and a downside. We frequently make business and financial decisions depending on the level of risk involved. In fact, determining risk is a key factor in running a business-those that are good at it succeed and those who aren’t all that good at measuring risk frequently fail. It’s what makes the world of business go around.
Instead of taking risks, it’s more about limiting risk.
Again, everything we do as entrepreneurs will have some degree of risk involved. Risk is just inherent. But this doesn’t necessarily mean that taking risks is the secret to success. To the contrary, most entrepreneurs get to where they want to be by limiting their exposure to risk instead of proceeding blindly without regard to it.
How is risk limited?
There are a countless number of techniques that business executives and entrepreneurs use to limit their risk factors, including (but never limited to) the following:
- Performing meticulous research and planning
- Faithfully testing, tracking, and analyzing results
- Turning to education as a resource
- Relying on statistical formulas
- Maintaining appropriate levels of insurance
- Using a proven plan instead of trying to reinvent the wheel
And we definitely shouldn’t forget the most common method of limiting risk-using good old-fashioned common sense. There are thousands and thousands of actual ways to limit risk. They’re not necessarily all easy to define, but these concepts kind of give us a good representation of methods that are used every day in business.
Discerning the myths from the truth…
The notion that entrepreneurs are risk takers is just completely false. In fact, this is probably just about the single largest misconception about entrepreneurship that there is. Business people that produce results time and time again actually do everything they can to get ahead in the game while taking on as little risk as absolutely possible.
Some people just get lucky, but by no means is being a wildly successful entrepreneur about taking a gamble. Persistent trial and error, using the risk limiting factors we’ve discussed above all the while, is how most entrepreneurs get from point A to point Z as they define the path to their business goals.
To take risk is foolish!
And to say otherwise is just irresponsible. Entrepreneurs have it hard enough-financing isn’t always easy to come by; winning business ideas and working models are just as difficult to source. Why would we want to waste the resources we’ve worked so hard to realize and limit our chances of succeeding by taking unnecessary risks?
Instead, as entrepreneurs, we should always think first in terms of accurately planning before acting and reducing our exposure each step of the way. Above all, we all need to remember that the concept of entrepreneurs being risk takers is just not reality.