A Guide to Risk-Taking in Business

People are different. Some are more risk tolerant than others.

Those who start businesses are much more risk tolerant because they’re betting on themselves. Entrepreneurs forgo any safety net and the security of working for anybody else. They challenge the market on their own and bet on their own decision-making.

That requires a degree of risk tolerance. 

This same principle often applies to trial attorneys that leap for more difficult cases.

Generally, there are people that want to win big while others want to lose small. Those that are risk tolerant are much more likely to leap at more challenging, larger opportunities — and when they succeed, they look like heroes. 

Unfortunately, there’s another side to this. People often don’t talk about the fact that the ones that tend to be more risk tolerant and place bigger bets are also the ones that are more likely to lose.

So there are merits to both. 

At the same time, you can argue on the other side of the equation. Those that don’t ever make that attempt— that don’t take on challenging and tough cases or very difficult and large, ambitious problems — never have the opportunity to make the climb. 

They play defense as opposed to offense, trying to minimize risk. They try to only bet on things where they can have extremely likely or even guaranteed outcomes of succeeding and thereby limit all of their upside.

If you’re one of these people that has a fear of loss, of being wrong, of making mistakes, of trying something and failing, of looking stupid, any of that — you’re not going to make a whole lot of progress. 

You’re going to stay in place. You’re not going to grow. You’re not going to develop. You’re not going to make a huge impact.

However, if you’re someone who takes big bets with the attitude “you only live once,” you could either get lucky and somehow succeed through that or you may very well end up losing everything. Never bet your entire business on any single decision. That would just be a very poor decision, especially if you have people who rely on you. 

It’s about finding a middle ground. 

I find that the best balance is to challenge yourself to say yes to new opportunities and approach things that you may have uncertainty around, but do it in a mindful, informed way. 

Weigh options on whether they can have a meaningful impact, but at the same time the downside is not so high that if things were to go wrong, you lose everything.

As you do this, you build confidence in yourself as you’re developing your skills and capabilities and taking on more and more challenging opportunities. Just do it wisely.

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