Mark Cuban once said, “if you’re prepared and you know what it takes, it’s not a risk. You just have to figure out how to get there. There is always a way to get there.”
In other words, if you make sure you’re wearing a parachute, the leap requires less faith.
Business leadership means developing risk tolerance
Risk taking and business go hand in hand. Authors have made millions stocking the shelves of libraries and bookshelves offering advice on how to be successful by taking risks in business. But the issue is usually far less about whether to take a risk, but how to react when risk presents itself. It is in these situations where a leader must decide, often quickly, whether the reward is worth the risk.
When you’re faced with risk, here are some things to consider before deciding whether to take the plunge. These questions and considerations apply whether the perceived risk is about supposedly successful business ideas, investment strategies or new job offers.
1. Seek counsel in others
When faced with a risk, turn to those you trust for more insights. Whether it’s family members and close friends, business advisors and mentors, legal counsel or co-workers, additional perspectives help you consider facets of the risk you may not have seen. These insights may make the risk seem less risky.
2. What might happen?
Is your start-up under consideration from a potential buyer? Is there an investment opportunity that could open up a new market but means incurring more debt? One question to ask yourself is, “What’s the worst that could happen if the risk doesn’t pay off?” And then what? And then what? Play out scenarios fully. The riskier parts of the venture may seem less dire. Consider that failure is not necessarily a bad thing. You will learn lessons from each endeavor.
3. Work the ‘what-ifs’
Worrying about what-ifs can always keep you stuck in inaction mode. Most of us overestimate the worst. Instead of what-ifs, think about what-if-I-don’t? If you will look back in 10 or 20 years and regret your inaction, then there’s even more motivation to take the plunge today. Pain and regret are often greater when considering roads not taken.
4. What does ‘ready’ mean?
Are any of us ever truly ready for the next adventure? None of us are fortune-tellers. Telling ourselves we’re not ready or, even worse, listening when others express such sentiment, will only hold us back. It’s likely your own definition of ‘ready’ is a bit conservative. What does ‘ready’ truly look like? Do you need more experience or education, or will learning as you go produce better outcomes faster?
5. What did you learn?
The truth is, throughout your life, you’ve taken risks. Whether in your professional or personal life, you’ve made calculated decisions that require a leap of faith. What have you taken away from those experiences, good or bad? What can you apply to the risk you face now?
Often business leadership is about being bold. You may need to prepare and ponder, but taking the bold step is often the route to greater success.