Can Taking Risks be Good? 7 Advantages of Risk-Taking in a Business
As a company owner, you probably have a ton of things going on at the same time. From product development to competition analysis, practical matters waiting to be resolved pop up like mushrooms after a rainy day. While all of this is important and plays a key role to your company’s success, there is a co-factor that, if left unexplored, can lead to your company’s failure before it even has a chance to take off. This important co-factor is, of course, your risk management culture. The advantages of risk-taking in a business are real and shouldn’t be overlooked.
Just like with your company’s corporate culture, a risk-taking culture is something you need to cultivate among your employees and co-workers. Make sure all employees are on the same page, though. Cultivating any type of culture is a tricky business, especially when it can either contribute to the company’s growth or its complete disaster.
In this article, we will explain what it means to nurture a risk-taking culture among your colleagues, the kinds of risks an organization can face, and 7 advantages of risk-taking in a business.
What does a risk-taking culture entail?
Risk-taking in business might sound a bit dangerous when you first think about it. But this has to do with every entrepreneur’s perception and personality. The first one can change. Perception can be altered when someone digs deep into a subject or has a number of bad experiences in the field. The second is less likely to change over the years. Yet it’s essential to come up with ways to take advantage of your best personality traits.
Taking risks is about employing yours and your employees’ perception and best features, so that your company can grow. According to your vision, you need to develop a cultural formula by which everyone must abide by. Break down your company’s departments and draw the lines of risk-taking when it comes to hard decisions and leaps of faith. This is an ongoing process, so you need to adjust it per case and per person sometimes.
To give you a picture, an organization has a risk-taking culture when its employees understand the dangers of each situation and act on carefully calculated risks. When they consistently make appropriate decisions and embody the risk-taking culture you have instilled in them over time.
To assess whether your organization manages risk efficiently, you need to evaluate how your employees react under stress. Evaluate your current risk management strategy and tweak whatever procedure/attitude you feel doesn’t reflect or facilitate your goals as a company. It is also important to look back on your mistakes and learn from them as much as possible. It’s inevitable to make new ones in the future, but repeating old ones can be avoided.
Which risk is “good” or “bad”?
Before moving on with the advantages of risk-taking in a business, we need to distinguish “good” from “bad” risk. The one is a risk you just take and hope everything will turn out for the better. By no means we’re up for that. Taking calculated risk in business is the only way.
Let us illustrate it with an example:
Companies that have fixed product or services pricing are against the use of coupons. It’s perceived that someone who would eventually buy even without a coupon, would take the decision earlier using the coupon you are offering. Resulting in your company receiving less money than it normally would.
On the other hand, you’ll have cases of people who are very price-conscious and are reluctant to buy your offering. Those people might also convert into a customer thanks to your coupon, and that’s your win!
What you should do is run experiments, create an audience that you think wouldn’t convert anytime soon and sent them a promotional coupon to see how it goes.
Oftentimes, things will not go as planned. But if you count this as a loss, that’s where you’ll lose focus. What you need to do is study the outcomes with your team, try to find and understand what went wrong and why you didn’t anticipate that result. In the next experiment, your chances to fail are far fewer than the first time!
This is all part of cultivating a risk-taking culture in your employees. Make them see that mistakes are part of the plan and the experimentation process. That the advantages of risk-taking in a business are worth a few setbacks. This way, they will feel safer and may unfold talents that include a small element of randomness or intuition.
On the other hand, taking “bad” risks means being reckless. When you and your team make decisions against your better knowledge and intuition. Although this should not be encouraged, it’s still part of the game.
7 advantages of risk-taking in a business
You should try to enforce a risk-taking attitude inside your company. After all, if you do just the standard moves, you’ll never be able to produce extraordinary results. And this is actually the real gain. Stepping out of your comfort zone can be liberating and lead to results that safe choices can never reveal!
Here are 7 important benefits that taking calculated risk in business can bring:
- Risk urges you to learn new skills and evolve already existing ones
- Fear of failure gets obliterated once you embrace a risk-taking culture
- It boosts creative thinking
- In “fight or flight” situations you can really define your true objectives
- You inspire self-confidence in your employees
- The team learns to trust each other when nothing else is left to do
- It will give your employees a sense of ownership, a sense of exploration, the motivation to take it one step further, to kick it up a notch.
It’s important to understand that by not taking risks, we might end up losing once in a lifetime opportunities. Therefore, you need to stop overthinking of what might go wrong and concentrate on where you want to be. Focus on the advantages of risk-taking in a business. Incremental changes can happen following the safest path too. When you aim to completely transform your business though, then you need to think big and figure out how to deal with challenges that are not easy to manage.
And always keep in mind that if you want to be an anomaly, you need to act like one!