Entrepreneurs - Risk-Takers or Risk Averse?

Friday, 13 July 2012

If you are risk averse but want to be an entrepreneur you may think this trait will make the task of being a successful entrepreneur more challenging. In actual fact this is a trait that will aid your chances of success if you harness it in the correct manner.

As a risk averse person you may be more sensitive to risk. This gives you the opportunity to identify risks and put strategies in place to minimize them. If you are someone who is good at anticipating what could go wrong you are well positioned to try to prevent things from going wrong.

I would argue, therefore, that the more successful entrepreneurs are those that are risk averse. They plan in advance, look at every possible eventuality (within reason) and mitigate against risk to increase the likelihood of achieving the outcome they desire. Being a risk-taker implies that you are prepared to gamble more than you want to or worse still more than you can afford to. If this is your strategy you could set yourself up for disappointment very quickly.

Below I have listed some tips to help the risk averse entrepreneur minimise risk and reach their goal whatever that might be:

1) Plan in advance. This would appear self explanatory. However if you do not have a step by step plan and have not explored what areas of your idea could go wrong, if they do go wrong, it will take you longer to fix the issue (that's assuming you can fix it at all). In addition to this who is your target market; have you got a niche or unique selling point (USP); how are you going to market you idea; do you need investment from a third party; what is your 12 month projection? These and other areas will need planning to allow you to succeed.

2) Research. When you have designed a plan do some research. See if what you are proposing can actually be achieved. Is your idea something that people will be interested in? Does it appeal to your niche market?

3) Be SMART. If you are familiar with goal setting you will probably be aware of this format. Your goals need to be(s)pecific, (m)easurable, (a)chievable, (r)ealistic and (t)imed. By following this format you are much more likely to achieve your goals which will increase your level of motivation.

4) Use a SWOT analysis. This is a great way to evaluate the internal (s)trengths and (w)eaknesses of your plan. Whilst exploring possible (o)pportunities and (t)hreats. This will allow you to objectively make decisions and strategies whilst minimizing risk.
This above list is a guide to support the aspiring entrepreneur minimize risk however is not exhaustive.
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