No one successfully starts or runs a business by being risk-aversive. But sometimes an entrepreneur or business leader attains a certain level of success and begins doubting his or her ability to take calculated risks. The hard truth is, only by taking risks can you effectively grow your business.
Ask questions and evaluate
There are smart risks and there are foolish risks. How can you assess which ones to take? Nothing’s guaranteed, of course, but by asking the right questions and accurately evaluating marketplace conditions, you increase the odds of successfully moving your business forward.
Say you come up with a great idea that might revolutionize your industry. Before jumping in, ask yourself: Will this idea work in the context of my business? If after careful evaluation, you determine it to be incompatible with your current product or service offerings, the smart move may be to move on.
What about developing a product or service that solves a nagging customer problem? Try to determine if your solution will actually work and if you can build and sell that solution cheaper than others.
Look at your competitors. Do they fall short in either product quality or customer service? Are they neglecting or ignoring certain key functions? Exploiting a competitor’s weakness is not a foolish risk to take.
Certainly it’s risky trying to build on another company’s groundbreaking offering. Instead, by maintaining a close eye on emerging trends, you can seize the competitive advantage by exploiting shifts in market conditions and becoming an unbeatable “first mover.”
In a similar vein, are you aware of an under-served niche in your industry? Sometimes a valuable new market (or region) is just waiting for someone to discover it. Just make sure there’s a demonstrated demand for your proposed solution. Spending money and resources on a product no one really wants is not a smart risk.
Trust your gut and bounce back
If you’ve carefully studied the market, at a certain point you just have to trust your gut. The most successful entrepreneurs develop a skill to move decisively when conditions are in flux and others are “waiting for the dust to settle” before making their move. Keep in mind that these same big-league entrepreneurs are constantly re-inventing themselves and their business. It’s a simple recognition that change is a constant and that your business must keep pace in order to succeed.
Finally, risk-taking entrepreneurs and business leaders understand that taking chances sometimes results in failure, but that isn’t the end of the story. The marketplace is littered with businesses that threw in the towel too quickly. Dogged persistence and the ability to bounce back are absolute requirements for growing your business.
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