Is This Business Risk a Smart One? Ask Yourself These 11 Questions
Leading a business often requires taking risks, but not all risks are created equal. Taking a calculated risk can lead to significant rewards, but blindly taking a risk without considering the consequences can lead your business down the wrong path.
Asking the right questions can help you determine whether a risk is a smart one or not. By carefully considering the potential outcomes, you can then determine if the risk is worth taking.
Here are 11 important questions to ask yourself before taking a business risk, as shared by the members of Rolling Stone Culture Council.
Can I Still Turn It Into a Positive if I Fail?
The difference between smart and dumb risks is the potential for gauging upsides and downsides while knowing how to make the most of which doors open up, even if a risk “fails.” Some of the best learning of my life has come from failing — it is an accelerator for personal growth. – Gavin Gillas, Project Venkman
What Happens if This Doesn’t Work?
Taking risks and leading means acting on your experience and instinct and sometimes proceeding into the unknown knowing that with any planning you never get it right 100 percent of the time. Can I live with the consequences of this not working? Can I see a path to recovery if some part of the strategy fails? Qualifying the downside is a valuable tool and can strengthen the resolve to proceed. – Chris Chiari, The 420 Hotels Inc.
Can I Justify the Decision if the Results Fall Short?
Taking calculated risks and making notable mistakes is a constant in the pursuit of business improvement. Before taking a risk, you should always ask yourself, “Can I justify this decision if the results are below what’s expected?” If the answer is “yes,” then go for it with confidence. – Rick Nechio, Fresh Vine Wine
What’s the Worst That Can Happen?
When taking risks, one question I tend to ask myself is, “What’s the worst that can happen?” If the “worst” is something you’ve already been through, then go for it. I’m a huge proponent of jumping and growing your wings on the way down! – Courtney Caldwell, ShearShare, Inc.
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Does It Align With My Purpose and Goals?
A smart risk is in alignment with your purpose, drive, vision and goals. Being intentional about what you’re doing will change the risk into a calculated one. Intention must be behind every plan of action. All entrepreneurs have taken the first risk, which is simply starting the business, and that leads to all other successful risks. If a risk is not successful, it starts a string of risks. – Marla Matime, The MAR.M Agency LLC
Does It Make Me Feel Alive?
If the answer to this question is “yes,” proceed. Life’s 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 it’s always better than the regret of never trying a single new thing or daring to dream up something new. I also firmly believe in instinct. If my gut is telling me something, I tend to listen. – Cate Rubenstein
How Does the Downside Compare to the Upside?
Assess three facets: the probability of success, the value of success and the harm of failure. If the downside is limited and the upside is tremendous, take the risk, even if the odds of success are slim! Many decisions fall into this category once we realize fear of rejection is a limited downside. The opposite is also true. If the downside is tremendous and the upside is limited, even if the odds of success are high, it might not be worth it. – Jeff Chen, Radicle Science
How Can I Mitigate the Potential Downsides?
By taking a more calculated approach and considering the potential downsides, leaders can make more informed decisions and reduce the chances of a negative impact on their business. It’s also important to consider the potential upside and if it’s aligned with the company’s goals. – Jason Saltzman, Relief
Does This Further My Company’s Vision?
While weighing the pros and cons and analyzing risk assessments is a significant step, remember your gut got you this far, so trust your instincts. Ask yourself if the risk aligns with your mission and values regardless of how it may turn out. Any risk that furthers your company’s vision is a smart one. – Andy Hale, Hale & Monico
How Bold Is This Risk?
Risk has a spectrum, but when I’m looking at a smart risk, I tend to look for boldness. It’s counterintuitive because most look for safe risks, which usually are not aggressive enough. For a risk to really make sense, I want to feel like I have something to lose and make a bold statement by taking that action. Otherwise, it’s probably not much of a risk and likely to not succeed. – Brian D. Evans, BDE Ventures
What Is My Gut Telling Me?
Frankly, I have followed my gut when it comes to most risky decisions. Here is the thing: A risk is such because of its own nature. If you have all the answers and data and projections, the decision wouldn’t be risky. So by definition, you must sometimes take the leap. If all else fails, sleep on it. – Victoria Kennedy, Marisa Johnson