5 Reasons Why Entrepreneurs Take Risks

For entrepreneurs, taking risks and business growth go hand in hand.

Entrepreneurs take risks on a regular basis, no matter how big or small they may be. This is not to say that entrepreneurs take risks just for the sake of it – successful risks are calculated and based on an underlying motivator. If you are interested in some of the most common reasons for risk-taking in the modern-day business world, see below for five.

1. Risks can be calculated

When taking a major risk, it is important to calculate the potential results and have contingency plans in place. While there are success stories of entrepreneurs taking the ‘ultimate’ risk, no risk which could see your business go completely under is advised. General George Patton put this perfectly when he said, “Take calculated risks. That is quite different from being rash”.

2. You’ll never know until you try

For the majority of entrepreneurs, a risk is a case of ‘what if’ and is seen as a means of advancing their business in some way. No matter how calculated it is, you can never be sure that a risk will pay off, however, there is only one way to find out. As Frederick Wilcox said, “Progress always involves risks. You can’t steal second base and keep your foot on first”.

3. Risk helps to distinguish between leaders and followers

Generally speaking, entrepreneurs take risks as it allows them to distinguish themselves from their competitors. In the competitive business environment that exists today, those who are willing to risk position themselves as leaders, while others get left behind. If you take a minute to think of a leader who you consider successful, chances are that they changed the way things were done for the better, and put themselves on the line during the process. This does not mean that all leaders take major risks on a regular basis, but it is safe to say that all leaders have taken at least one risk in their career which has helped them achieve their current position.

4. Without risk there is no innovation

Innovation cannot occur unless there is an element of risk to begin with. Whether it’s a new product or a change to existing practices – these will both be considered a risk. T.S. Eliot said, “Only those who will risk going too far can possibly find out how far it is possible to go”. When innovating, the level of risk can be mitigated by ensuring that all possible calculations have been made to evaluate whether it is the best option moving forward.

5. It is a chance to learn

Without risk, entrepreneurs will not experience failure and therefore will not learn from their mistakes. Of course it is possible to learn from positive experiences too, however, failure teaches us a very powerful lesson that tends to stay with us for life. In addition, taking risks teaches us important skills such as how to calculate contingencies as well as strategic thinking and planning.

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What do you think?

Can you think of any other reasons to add to the list?

Entrepreneurs take risks on a regular basis, and while not all of them pay off, many have proven to be highly successful. I’d love to hear of your experiences with risk throughout your career – both the good and the bad. Comment them below to share your experiences.

To your success

Andries van Tonder

Serial Entrepreneur/investor since 2013.
South Africa.