A lot of entrepreneurs refrain from taking risks in business. There’s a lot of second-guessing and gut-wrenching fear about what if things don’t work out the way they imagined.
Well, countless small-business owners are now global entrepreneurs with a lot of success and money because they took risks initially. Imagine the state of our technology, economy and society without these risk-takers!
Let’s take a look at why risk-taking is essential for entrepreneurs:
1) Higher the Risk, Greater the Potential Reward
It does not mean taking risks blindly without any research and technical know-how. Taking risks involves diligent market research and scoping out various possibilities and outcomes before embarking on such a journey.
The risk-return tradeoff applies for investors as well as entrepreneurs using that investment.
Calculating future scenarios and business capabilities beforehand is essential. Factors such as overall risk tolerance and the ability to replace lost funds is a must.
2) Innovation is Impossible without Risk
Innovation is all about diving into the unknown in order to create something new. Your existing skills can help create something that has never been thought of before.
How can you innovate if you are not willing to accept the chances of failure?
That’s why it is all the more important to calculate all the variables in advance to lessen that risk and to have to a contingency plan in hand.
3) Risks are a Source of Learning
When you take risks, you give yourself the opportunity to learn even if it doesn’t work out. It’s a great way to become a strategic thinker and brilliant executioner in the future for your next venture if one doesn’t work out.
Moreover, when you take risks, you encounter various challenges and it gives you the insight to be dynamic in order to accommodate the uncertainty involved in the market.
4) First Mover Advantage
If you don’t take risk now, you cannot be the market leader in the future. Netflix, Amazon and countless other brands took the risk in their early days to seize the potential opportunity and look at where they are now.
They were the first ones to the market in their respective segments of online streaming and e-books.
All the others who might have refrained from taking the risk at that stage have just been playing follow- up to these market leaders.
Featured image via Getty Images
Written by Gagan Dhawan
