Being an entrepreneur is all about taking risks and reaping rewards. But it’s how you go about taking those risks that defines how successful you are in business. And whether calculated or impulsive, any risk has the potential for a negative outcome.
However, with time and experience, it is possible to get better at taking risks and determining whether or not they’ll work out for you. Below, the members of Rolling Stone Culture Council share some signs you can look for that will indicate if you’re about to make a big mistake rather than a risk that’s going to pay off.
People Aren’t Questioning You
You might be about to make a mistake if you’re finding yourself surrounded by people who only tell you “yes” or overly complacent people who don’t question your decision-making. The antidote to bad decision-making is perspective, and you can’t gain a broad and informative perspective if everyone around you agrees with you. This, more often than not, leads to blunders. Instead, surround yourself with people who aren’t afraid to share opposing views. – Tyler Gallagher, Team 33
You’re ‘Betting the Farm’
The Risk Impacts Multiple Areas of Business
If the ripple effect of your risky decision impacts more than one area within your business, you may want to reevaluate or ensure you have a strategic plan to address the ripple effect. Big risks can mean big reward; however, big risk without an understanding of the implications on others and their work can be devastating. Consult with all departments about your decision prior to executing. – Amanda Dorenberg, COMMB
You’re Not Prepared
One sign you’re about to make a huge mistake is if you’re breaking into a new industry or niche without being prepared. My PR firm/SEO agency started in the cannabis industry and now we’re expanding into new industries. However, we’re doing research long before new clients come onboard. – Evan Nison, NisonCo
You’re Falling for the Sunk Cost Fallacy
The sunk cost fallacy is one of the most dangerous biases we can experience when it comes to business. It’s never a good sign when your assessment of taking a risk relies on the amount of effort that you’ve made up to that point in order for it to be justified. In short, your reason for persisting should never be because you’ve already worked so hard and you don’t want to waste that effort. – Chris Murray, FoxNRTH Inc.
You Don’t Have All the Information
For me, it’s a combination of doing my homework or due diligence on the issue and a “gut feeling.” If I just feel the excitement of the idea without having all the information I need, it can be a red flag. Things can sometimes seem so glitzy on the surface. Be sure to check in with yourself, do some research and then, if all looks good, go for it! – Karina Michel Feld, Tallulah Films
You’re Not Navigating From a Place of Clarity
Checking in with how you feel about the risk is the best place to start. When I navigate from a place of clarity rather than a knee-jerk reaction, the payoff is alignment and a result. The result isn’t always what I want it to be, but the path is clearer and results happen quicker. – Ginni Saraswati, Ginni Media
You’re Putting Your Trust in the Wrong People
It’s always important to think about who you are trusting when making a business move. At the end of the day, it’s people who make decisions and make things happen. Make sure you have the utmost trust in your people. – Christian Anderson (Trust’N), Lost Boy Entertainment LLC
Your Gut Feeling Is Off
I’ve come to believe everyone’s instincts are typically much more accurate than we give ourselves credit for. If you’re about to make a huge decision with a lot of risk behind it and your gut feeling is that something is off and it’s too good to be true, it probably is. Trust your instincts, and if you’re seeing red flags, it can be invaluable to ask those you respect in your niche what they think. – Tyler ‘Jett’ Prescott, PennyFly Entertainment