All entrepreneurs are to varying degrees familiar with risk and it’s close companion fear, but to develop and expand their businesses, business owners need to learn to take calculated risks.
According to Christo Botes, executive director at risk financing company for formal small and medium enterprises, Business Partners, if business decisions were solely based on the amount of risks associated, entrepreneurs would probably never commit themselves to a business decision.
“To be successful, an entrepreneur must therefore have the ability to calculate and consider the risk and then commit themselves to their decision to ensure results,” he says.
Botes‘ advice is for entrepreneurs to accept risk as a necessary part of the entrepreneurial journey and to aim for the maximum reward for the lowest risk possible.
Here are Botes‘ other practical tips on how entrepreneurs can manage their fear of risk:
1. Embrace risk by establishing short term goals
Get comfortable with the idea of risk, as it is part of your daily business operations and will play a major role in determining your success as an entrepreneur. Start by setting achievable goals that you will be able to accomplish in a short period of time. Achieving these short term goals will give you the courage and experience to avoid decisions which carry greater risk for your business later on, without being discouraged by the fear of potential losses.
2. Know your market environment
Information and research are the key ingredients to increasing your risk tolerance. The best way to manage your risk is to create a deep understanding of the market the business is operating in. Being familiar with the opportunities and risks in your marketplace will give you an advantage over your competitors, and enable you to distinguish more easily between risk and danger.
3. Seek advice from fellow entrepreneurs
Becoming an entrepreneur is risky no matter how you look at it. However, by seeking mentorship from seasoned entrepreneurs you will empower yourself to unleash your own, and your business’ full potential. In other words, the more you know, the less you fear. If you’re having difficulty accomplishing your goals, it could be beneficial to brainstorm ways to manage your risks by seeking mentors that have the information or skill set that you require for the issue at hand.