The biggest risk you can take is not taking any. This is a motto that should be emblazoned across every entrepreneur’s heart. Your business needs you to take risks because success won’t just fall in your lap.
In 2005 Hamdi Ulukaya took a risk, he went against his lawyer’s wishes and purchased a small derelict factory in upstate New York in order to start producing his own brand of Yoghurt. This brand is now known as Chobani and is netting more than £1 billion in annual sales.
So what benefits do I get from taking risks? How does it help me and my business become a groundbreaking company? Here are just a few reasons why risk is every business person’s friend.
A risk taker gets a first mover advantage
The first mover is a phenomenon often studied in contemporary economics. In short, this idea argues that if you are the first to move into a specific market or industry, you will gain a competitive advantage. Being the first mover allows you to acquire a significant majority of the market as well as generate superior brand recognition and customer loyalty. Even when competitors try to capitalise on your company’s success, the advantage of the first mover is enough to remain on top.
Examples of first movers are littered through all industries and sectors. Just take eBay, the first company to take auctions online. Due to its risk taking to become the first mover, eBay has dominated the online auctioning process and now earns annual revenue of well over £6 billion.
Due to economic, cultural and technological changes, there will always be new markets. So if you spot a new trend or gap in the market then pounce, take a risk and be the first mover. Playing it safe and thus refusing to be a market leader, will never allow you to become a groundbreaking company.
Risky marketing techniques can pay off big
When businesses play safe in marketing it often leads to little real gain. However, when risks are taken the outcomes can be astonishing.
For example, HelloFlo launched in 2013, is a subscription service that sends packages to women each month filled with sanitary products and other helpful items. Business started slow. The traditional marketing techniques generated little growth and sales.
Because of this, HelloFlo decided to take a risk and produce an ad in the form of a short Youtube clip. This was not the traditional, boring and safe ad often produced by sanitary product companies. Instead HelloFlo took a risk to create a short, honest and hilarious ad that took on the often taboo subject. Their ad below named ‘Camp Gyno’ has now been watched over 11 million times and has been a viral success boosting sales along with it.
You only can get this kind of success by taking a risk.
Risk to combat stagnation and decline
A significant proportion of entrepreneurs that are afraid of taking risks allow their business to fall into stagnation and decline. It’s easy to get stuck in the same habits in your comfort zone. But ignoring dynamic risk based growth will always damage your business. Top performing entrepreneurs are always adding a little risk, whether that’s by experimenting with products, prices, rebranding or re-inventing their companies.
Risk and loss can make you stronger
Beyond the financial opportunities posed by taking risks, there is also the possibility for internal growth and development.
But don’t take it from me, Heather Rabbatts, the first female non-executive director of The Football Association says this:
“I think I’ve always felt that there was something quite exciting about taking risks. And there’s a great saying, actually, that you only learn when you are at risk and I’m fascinated by both risk and learning, so that has led me to take jobs that people would think ‘you can’t do that, that’s just impossible.’ No it won’t be.”
We learn from risks and we learn from loss. These lessons lead us on new paths and make us stronger.
Risk taking doesn’t have to be dangerous
Risk taking isn’t synonymous with recklessness. With every risk comes the responsibility to minimise their threats and maximise their potential.
Always identify what and how things can and might go wrong. Devise contingency plans from this and place strategies to deal with it.