Merriam Webster defines risk as the possibility of a loss or injury, and while we are taught to steer clear of risky situations, we all experience moments where taking risks are necessary. In the life of an entrepreneur risks not only become more prevalent, but are what your life consists of. How those risks are handled will determine your success. Below we’ll discuss what these risks can look like, and how to handle those risky situations when they arise.
Risks You’re Sure to See
Instability of Income
While many begin their entrepreneurial journey testing the waters by burning the midnight oil in their free time, others literally take the plunge, quitting their jobs to put their all into their idea and ventures. There isn’t a set formula for success regarding either, but if you’re ready for the plunge, be aware that doing so could result in a tighter budget and a reoccurrence of that old college ramen and pasta diet.
Going All in With Personal Savings
Many prefer and must continue working, not because they aren’t ready for the risk of taking the plunge, but because their job is their means of funding their venture. If you’re willing to take a leave of absence, and you haven’t quite found your angel, literally, your means of financing could fall on whatever cash you have saved.
“Sorry, I Can’t Tonight”
Cash isn’t all that can be sacrificed being an entrepreneur. Our personal relationships can be risked also. To be dedicated to your idea and its success results in many hours spent working (sometimes outside of a standard job), and time and events missed with family and friends. I personally have had to take a step back from family and friends to accomplish what’s necessary for courses, but try to make it a priority to spend time with those I care for periodically.
For more on the risk you’ll see as an entrepreneur, be sure to check out Jasyon DeMers’ article for Entrepreneur
Embracing the Uncertainty
Risk taking is synonymous with entrepreneurship so it’s key as an entrepreneur to accept the uncertainty this lifestyle can bring. Understanding that there will be ups and downs in your journey is necessary for being open to the risks and reducing fears towards risk.
Weighing the Odds
Embracing risk does not mean that we shouldn’t minimize risk as much as possible. A study by Halle Institute for Economic Research, found that despite popular belief entrepreneurs are not more inclined to risk than others. That said, successful entrepreneurs stick to the basic principles of risk management according to Joel Trammell in his article for Entrepreneur, looking for opportunities where loss is minimized to a certain value, but if a win is present its maximized efficiently.
Takings risks can be scary and difficult to prescribe to. We each have different levels of tolerance for risk. Despite the difficulty risks bring, they are synonymous in an entrepreneur’s life, and are necessary for finding success. As state before, embracing risk doesn’t mean we shouldn’t minimize out risk as much as possible, but that we understand it’s place in our entrepreneurial journey.