No business ever grew or flourished without at least some calculated risks. If you always play it safe, your braver competitors will crowd you out of the market. On the other hand, reckless behaviour is just as sure to ruin you.
So, how do you take appropriate risks in your business?
Without doubt, employing people is risky. When should you hire? How many people should you hire? How much should you pay? How much experience should you look for?
However, this should be one of the easier decisions you make. Your business will flourish or flounder on the back of the people you hire. If you can attract and retain talented, driven and creative people, they will drive your business to new heights. If they cost you a little more, that’s un-important in the scale of the return they’ll give you.
Unless your products have a USP, you’ll struggle to succeed. Your products don’t have to be the best, the quickest, or the latest, but they do have to have something unique which appeals to a large enough part of the market to allow you to flourish.
Perhaps you’re the cheapest? Or the easiest to get hold of? Or are the most local? Whatever it is, you need to take whatever risks are necessary to ensure that your products and services stand out from the crowd, and to a large enough part of the market.
Employing one effective sales person, let alone a whole team of them, is not a task for the faint-hearted. However, you have little choice as your business’s success will no doubt depend crucially on making enough sales. To deal with the risks, you need to set clear and smart objectives and be ruthless at shipping out non-performing sales people.
Marketing can be as much art as it is science and spending on marketing activities can feel like an afternoon in a casino. However, you need to let the market know about you and your products and services if you hope to succeed. A good marketing professional will guide you through the options available and the risk levels involved.
Part of reducing the risk is to be clear about the reasons behind different marketing objectives. Be clear with your marketing people about whether you want to generate sales opportunities, build your brand, identify your most profitable market or make your products as attractive as possible. Being clear on what you most want to achieve will maximise the chance of achieving what you want and need.
How do you manage your hard-earned money? The risk-free option may seem to be to preserve cash and put away as much as possible as often as possible. Certainly, there’s a lot of sense in having enough of a cash reserve to weather tough times.
However, if your only objective is to preserve cash, you will never make the necessary investments needed by all businesses to grow and flourish. As with so many things in life, a sensible approach of having rainy day money as well as money to invest and grow is often the best route.
You can’t and shouldn’t avoid all risks in business. But neither should you gamble irresponsibly with your company. Success comes to those who weigh up which risks are the right ones to run with. It’s a necessary evil. As recognised by Mark Zuckerberg, “the biggest risk is not taking any risk... In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks”.
Heather Foley is a consultant at etsplc.com
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