Entrepreneurship and intrapreneurship is highly connected with getting risk. Whether you’re launching your startup or expanding your goods or services, every venture brings the risk of failure. Yet only 17 percent of executives surveyed said their risk-evaluation strategy were working, and 70 percent said their companies had no such procedures in place.
Instead of taking each decision as it comes, formulate a calculated risks evaluation process for each decision. Every opportunity should drive forward your company’s long-term vision, but there are a few principles that ensure you’re making smart moves when it comes to risk.
1. Balance your essentials with innovation.
As a leader, you don’t want to stick to the basics, but you can’t completely abandon business as usual. This means balancing two competing variables: maintaining your revenue model and encouraging innovation. The moment you stop looking for new opportunities, your business risks to lose market share from the more innovative competitors.
To identify the best opportunities, you have to be updated with the latest information in your business. Otherwise, market changes very fast and profitable opportunities will fly away, giving your competitors an advantage. Stay on top of innovation by constantly monitoring your environment, examining other industries’ best practices, staying current trends and continually improving business. Look for emerging patterns and niche markets, draw actionable insights from them so you can make informed decisions about where to invest.
2. Be critical for upcoming opportunities
Don’t invest in every opportunity that comes to you. Take a step back to calculate risks involved. Start with research and gather as much valuable information as possible. List possible outcomes to weigh your opportunities. This way will ensure you’re not driven by emotion or held back by fear.
Next, go back to your company’s USP – (unique value proposition). Does this new product or service is complement with your core competencies? Are you seen as credible in that space? If an extension strays too far from your current market, customers may got confused.
You need to calculate risks and set a reasonable return-on-investment strategy, not just regarding financial gains, but also in establishing your brand image. How this innovation can lead to new customers or diversify existing revenue streams? Also what timeline is reasonable to realize those returns?
Finally, get feedback from focus group and trusted advisers. Walk them through your idea, and ask them to identifying any potential risks.
3. Learn to say NO
As you calculate risks, be ready to turn down some really good opportunities. If you’re an idea and risk taker person, saying no can be hard.
A trusted consultant told me, “You have so many ideas, but you can’t realistically pursue them all. You have to learn to say no to most of them so you can say yes to the best ones.”
Over time, I’ve seen that saying yes to everything would mean going wide but not deep. It’s better (and more profitable) to be an expert in a few areas than to offer shallow knowledge in everything.
4. Be ready to change course.
Once you’ve walked through this process, keep your forward-focused mindset. As you start implementing new ideas, you may need to change course.
Developing a new product or service is risky, you’re spending time, money and talent. As any entrepreneur will tell you, the risks don’t disappear after your startup gets off the ground. To grow, you have to explore new markets, products and offer new services. By developing a calculated risks evaluation strategy that works for your business, you can plan your next move with your eyes wide open.