How much risk should you take in business?
WASHINGTON, April 23, 2014 — Venture capital expert Andis Harasani isn’t afraid of risk. In fact, he credits it with getting him to where he is today.
“Embrace risk. I consider being a risk-taker one of my strongest characteristics. It’s helped me move up and go further in each of my professions,” said Harasani.
Every entrepreneur has a different risk tolerance. Although, if they are an entrepreneur, they have already been able to take a major risk in starting a business.
As President Jimmy Carter once said, “Go out on a limb. That’s where the fruit is.”
That doesn’t mean it needs to be reckless. It is important to be able to identify good risk when making business decisions. There are some key questions that a business should ask before taking risk. There is a level of risk assessment needed before moving forward.
“A business cannot grow without risk. Be ready when the right opportunity comes to seize it,” said Andis Harasani. “If you are smart in your risk assessment, you’ll know the right time to go for it and also the right time to wait.”
There are questions every business should ask when doing risk assessment. Risk can never be avoided fully but it can be managed. By creating a process, it will better serve the business to make the right decisions.
Ask these four questions to reduce business risk.
How well do you know your customer? It’s important to understand trends, cost of customer acquisition, and analyze where the market is heading. The more that is known and can be determined about a customer base before making a big move, the less risk there is. The greatest unknown is how customers will receive a product or service. Know more, risk less.
Are you in a position to take on risk? If the business is about to fail, then risk may be the only thing that can save it. However, if it is determined that other opportunities will exist and there is a better time to do it, that is a prudent decision. If the company has already seen success or is in a good financial position, it may be easier to take more chances.
What are the current trends in the industry? If competitors or preceding companies have taken similar risks, then learn from them. The timing may be right internally, but if the market isn’t ready, then it’s not an appropriate risk.
Are you in a position to handle success? Chances are, this won’t weigh much in the decision-making process. It’s hard to say there is anything wrong with success, unless scaling a business is discussed. If operations and systems aren’t in place to grow with success, then that creates greater risk.
“If a company is taking a risk, then they have to embrace it. They have to prepare for success, for more business, more customers, greater scale. Think about whether you will fail before you decide to take the risk. Once you take the risk, don’t think about failing. Dive in and don’t look back,” said Andis Harasani.
Jeff Barrett is an experienced columnist and digital public relations professional. He has been named Business Insider’s #1 Ad Executive on Twitter, a Forbes Top 50 Influencer In Social Media and has contributed to Technorati, Mashable and The Washington Times.