Should You Risk It For The Biscuit? How To Take Calculated Risks In Business
Have you ever heard the saying, “You miss 100% of the shots you don’t take?” Business is all about taking chances and hoping they work out. Sometimes a leap of faith leads to something amazing—but the threat of failure prevents plenty of small business owners from taking risks.
After all, how can you know for sure that a risk is worth it? What if the wrong move ruins your finances? Or hurts your business forever?
The thing is, you can’t win if you don’t play the game. You have to take some risks if you want your business to grow. But we aren’t telling you to go crazy; responsible business owners have to learn how to take calculated risks.
3 steps to take calculated risks in your small business
A calculated risk is different because you don’t jump into a situation blindly. You dig in and do your homework before committing to a radical, new path. Follow these quick tips to make sure a leap of faith is what you truly need.
Tip #1: Do your research
Facts should dictate your next move. This means starting with a simple Google search but drilling down more deeply from there. That might mean interviewing industry experts, reading white papers, or conducting surveys to back up your assumptions.
Tip #2: Make a quantifiable plan
A risk without a plan is a mistake waiting to happen. Calculated risks rely on structured, quantitative plans that keep you on the straight and narrow. Your plan should include:
Finances. How much will this cost? What’s your realistic earning potential? What’s the opportunity cost?
A rough timeline. But give yourself enough flexibility here, because life happens! Delays are often part of the process.
Goals. Use the SMART goal setting framework to write a measurable goal. This way, you’ll know for sure if the calculated risk was actually worth it.
Tip #3: Write the pros and cons
You’ve done your research and made a plan. But is it a good idea to proceed? We recommend doing a pros and cons list to evaluate whether your calculated risk is worth it.
Weigh the pros and cons like:
Time. How much time will you need to spend on this?
ROI. How likely is it that you’ll see a return on all of your hard work?
Branding and image. Does this new direction align with your business values?
If the cons outweigh the pros, it might not be the right time to take a risk in your business.
The bottom line
While every business requires some amount of risk-taking, you shouldn’t jump on every harebrained idea you find. This is about calculating an opportunity’s potential versus its liabilities. Follow these 3 steps to see if a risk could be worthwhile for your business.