You may have come across stories of successful entrepreneurs, who have spoken about their entrepreneurial journey, being driven by risk.
Going on the path of taking risks, as an entrepreneur, is most likely, to stand you out, from your counterparts.
Your peers might be gripped by the fear factor and may not be willing to explore unknown grounds, but on the other hand, your willingness to take the bull by the horn gives you an edge over them.
When, however, the outcome of your decision pans out, you will always gain valuable lessons from it.
On a general note, does risk-taking, lead to success? The factors stated below might just give us some answers to that question:
Open risk-taking, is not always productive, as it may appear, rather, successful entrepreneurs have the tendency, to take on risks that limit their eventual potential loss.
Leonard Green, points out the difference, between risk-takers and calculated risk-takers, as the difference between failure and success.
“Entrepreneurs are not risk-takers. They are calculated risk-takers”, stressed Green.
Successful entrepreneurs, find ways to mitigate certain risk factors, which often puts them on the winning side.
They get insurance, or, carry out a risk assessment, on their business.
A Survivors Bias
Many entrepreneurs, still credit their success to risk-taking.
Do we deny this truth, from their success stories? No. A number of evidence they put forward to back up their claims, may not just be sufficient enough, to show the effects of risk-taking.
Where is the place of a survivor’s bias?
They often tell the success stories and leave out the part of the failure.
The success part, makes an entrepreneur appear like taking the risk head-on with no regard for the consequence to bear.
An average successful entrepreneur is guilty of this bias.
Survivorship bias often distorts the perspective that one has, on the role that risk plays in success.
Risk Vs Uncertainty
Risk and uncertainty, are quite different concepts.
Though, both concepts can be explained, as a situation, showing an unknown outcome.
Risk can be the distribution of known probabilities, or, chances.
For instance, when someone tosses a dice, the chances of a four, appearing as an outcome is, 1 in 6.
You could find the other chances and have a direction of what risk you are planning to execute.
The game of uncertainty, meanwhile, comes in, as a distribution of unknown probabilities, or, chances.
Imagine someone randomly picks cards from a different set of a deck of cards, in your presence and comes up with another set of 52 cards.
From the above illustration, an entrepreneur would build his, or, her business, on where the chances of success are and they tend to choose uncertainty over risks.
Conclusion: One cannot, separate success from risk-taking, outright, as there appears to be a strong relationship, between both.
A number of complications exist to say with a 100% level of significance that risk-taking may likely increase one’s chance of having a successful outcome.
Ultimately, even, the boldest of entrepreneurs would need to find ways, to mitigate, or, cushion the effect that comes with the damage, from the risks they take.
With these factors, it is possible to turn future risks to your advantage.
Featured Image: picpedia.org