Risk is an interesting concept, we need to understand what it means in real terms as entrepreneurial activity can mean that you are more exposed to both risk and uncertainty.
The ‘unsettled’ feeling that drives a wage slave to be an entrepreneur by taking them away from the ordinary to the path less travelled carries will carry with it a degree of risk.
Risk can be defined as the potential that an individuals chosen action (or inaction if they stay as they are) will lead to an undesired outcome.
Perhaps some of us make the jump when we get to a tipping point when if we don’t risk anything, we risk even more. Knowing when we are at this hiatus is difficult to work out as outcomes are not easily quantified,
for example what will it do to you as a person in the long term if you don’t take the risk and follow your dreams.
Some of us have the advantage or the disadvantage to have to take a risk because our back is against the wall and there is no other option, this is probably when it is said ‘there is nothing to lose’.
Life inherently has risks involved with just about everything we do, perhaps the entrepreneur is mealy taking the initiative to act and take opportunity when it arises, perhaps there are no risks involved except the fear of failure. There are obviously other factors involved and not just risk when we consider the reasons to start a new venture, confidence, self-belief, additionally how uncomfortable we feel in our present situation and our desire to achieve are key drivers.
We need to understand that the ‘drivers’ to start a new venture may not diminish risk but they make us ‘disregard’ risk and that is a trap we can’t fall into.
Perhaps the entrepreneur should head that ‘Risk is the effect of uncertainty on the outcome’, and this equation we can use to our advantage
Risk comes from not knowing what you’re doing. Warren Buffet.
Perhaps the solution when considering risk is to try and decrease uncertainty by increasing our critical success factors and by making sure we have the resources needed to achieve our outcome.
I see uncertainty as a positive driver, as we have already mentioned we need to gain the experience and resources to handle what comes away, however uncertainty may also mean new opportunity as well as challenges.
In financial terms risk is when the actual return is different from the outcome, the degree of risk is known as the exposure, as individuals can minimise our exposure by improving our selves, our resources and our skill set to set us up to win.
- Increase your Knowledge base.
- Trust yourself and have self belief.
- Pay others for their expertise.
- Learn from success and also your mistakes.
- Be Dynamic, wiggle and change direction when you need to.
We need to minimize our risk by educational application and trust in our own ability.
The drivers that get us started do not actually effect the risk of a venture.
None of us can predict the future there is always a degree of uncertainty.
You may have to change direction along the way.