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Running a business often requires taking risks, but not all risks are equal. Taking calculated risks can lead to huge rewards, but blindly taking risks without considering the consequences can lead your business in the wrong direction.
Asking the right questions will help you decide whether or not the risk is smart. By carefully considering the possible consequences, you can determine whether the risk is worth taking.
Here are 11 important questions to ask yourself before taking a business risk, as members of the Rolling Stone Culture Council share.
If I fail, can I still change it to positive?
The difference between smart and dumb risks is the ability to measure ups and downs, knowing which doors to open, even if a risk “fails.” Some of the best lessons in my life have come from failure – it’s a catalyst for personal growth. – Gavin Gillas, Project Venkman
What if this doesn’t work?
Taking risks and leading means working with your experience and instincts and sometimes going into the unknown knowing that you won’t get it 100 percent right with any plan. Can I live with the consequences if this doesn’t work? Can I see a recovery path if a part of the strategy fails? Qualifying the hurt is a valuable tool and can strengthen your resolve to keep going. – Chris Chiari, 420 Hotels Inc.
Can I confirm the decision if the results are short?
Taking calculated risks and making significant mistakes is a constant in the pursuit of business improvement. Before taking a risk, ask yourself, “Can I justify this decision if the outcome is less than expected?” You should always ask yourself. If the answer is “yes”, then boldly go for it. – Rick Niccio, Fresh Wine
What’s the worst that could happen?
When I take risks, one question I tend to ask myself is, “What’s the worst?” That’s what it says. If “the worst” is what you’ve been through, then go for it. I’m a big fan of jumping and raising your wings on the way down! – Courtney Caldwell, ShareShare, Inc.
The Rolling Stone Culture Council is an invitation-only community for influencers, creators and innovators. Am I eligible?
Does it fit my goals and objectives?
A smart risk is one that aligns with your purpose, drive, vision and goals. Being intentional about what you’re doing turns risk into calculation. Purpose must be behind every action plan. All entrepreneurs take the first risk, which is simply starting the business, and that leads to other successful risks. If one disaster fails, it starts several disasters. – Marla Matime, The MAR.M Agency LLC
Does it make me feel alive?
If the answer to this question is “yes”, continue. Life is too short to play it safe every day. Go for what you want and put yourself out there. Sometimes it works and sometimes it doesn’t, but regret is always better than never trying something new or daring to dream something new. I also believe in instinct. If my gut is telling me something, I tend to listen. – Kate Rubenstein
How does the downside compare to the upside?
Evaluate three dimensions: probability of success, cost of success, and damage of failure. If the stakes are limited and the upside is huge, take the risk even if the odds of success are slim! Many decisions fall into this category once we realize that the fear of rejection is a limited downside. The opposite is also true. If the stakes are too big and the upside is limited, it may not be worth it, even if the odds of success are high. – Jeff Chen, Radical Science
How can I minimize potential harm?
By taking a more calculated approach and considering the potential downsides, leaders can make more informed decisions and minimize the negative impact on their business. It is also important to consider if it is in line with the company’s objectives and if it is in line with the company’s goals. – Jason Saltman, relief
Does this further my company’s vision?
While weighing the pros and cons and analyzing risk assessments is an important step, remember that your gut will get you this far, so trust your instincts. Ask yourself if the risk is aligned with your mission and values, no matter what the risk may be. Any risk that advances your company’s vision is smart. – Andy Hale, Hale and Monique
How brave is this risk?
Risk has a spectrum, but when I look at smart risk, I look for boldness. It’s counterintuitive because most people look for safe threats, which are usually not aggressive. I want risk to really mean something, to feel like I have something to lose, and to make a bold statement by taking that step. Otherwise, it’s probably not much of a risk and it’s more likely to fail. – Brian D. Evans, BDE Ventures
What is my gut telling me?
To be honest, I followed my gut to make very risky decisions. Here’s the thing: An accident is caused by its own nature. If you have all the answers and information and predictions, the decision won’t be risky. So by definition you have to jump sometimes. If all else fails, sleep on it. – Victoria Kennedy, Marissa Johnson
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