The views expressed by the business participants are their own.
I have a friend who is always getting into trouble. He broke his ankle jumping off a high wall. He got drunk and drove his car off the road, and his driver’s license was suspended. (He’s lucky it wasn’t too bad.) The number of injuries he’s dealt with in the time I’ve known him is more than the most careful people in their lives. I tell this friend that she’s “too brave for her own good,” but really, that’s being overly generous. My friend lacks courage – he takes unnecessary risks.
Entrepreneurs are often praised as risk takers, perhaps because of the number of entrepreneurs who embody those ideals. Bill Gates said, “To win big, sometimes you have to risk big.” Howard Schultz instructed others to “risk more than others think is safe. To dream more than others think is practical.”
But as my friend and his antics show, there’s a difference between being a risk taker and being bold – and only the latter is needed for an entrepreneur.
Related: You’ll Fail to Take a Risk Unless You Follow These 5 Strategies
Risk taking vs. courage
There is a difference between taking a risk just for fun and taking a risk for something.
It is true that people tend to take risks when there is a greater reward at stake, a fact investigated by marketing professors Derek Rucker and David Gal. It turns out that although people often want to think of themselves as brave, they tend to be reluctant to take risks when there are great rewards to be gained. “Courage is not just about taking risks,” the professors wrote. “It’s dealing with fear in a job that’s connected to a higher-level goal or that has meaning for the individual.”
I admit it: My wall-jumping friend is weird, since there wasn’t much I could gain by doing that jump. I consider myself risk-averse, but I also realize that it takes courage – and no small amount of confidence – to spend time building a business when you could be doing something else.
For entrepreneurs, I agree to take Harvard Business Review that founders are not inherently at risk; we simply define risk differently. For others, danger not pursuing an entrepreneurial path is somehow greater than taking the so-called safe option. That was true for me, especially the way I did it. Bootstrapping has allowed me to monitor the success of my business, Jotform, and grow in line with market needs. I didn’t quit my day job until I started earning enough to support me.
So with all due respect to the Gates and Schultz’s of the world, it is entirely possible to be risk-free and successful. The most important thing, in my opinion, is to be pragmatic.
Finding balance as an entrepreneur
Deciding to take a risk doesn’t have to be a mistake – that’s why there is such a thing as “calculated risk.” If you’re trying to decide whether a new business, whether it’s a startup or a product, is bold and innovative or just silly, I recommend doing a SWOT analysis.
A SWOT analysis is a matrix that sets out strengths, weaknesses, opportunities and threats, and is a very important part of determining whether an idea or business model is viable. We often use SWOT analysis in Jotform to check which products attract the most customers and use that information to determine the need for future projects.
To make the most of your SWOT, I advise focusing on the interactions between the four categories, so that you can easily identify available solutions to threats and weaknesses. Be open to discovering new information that you might not have noticed if you had been analyzing each quadrant on its own. Say, for example, that your company’s weakness is that your product is not differentiated from the competition. Therefore, the threat can be competitors who specify how their products meet the needs of customers. It is possible that a critical issue in one category is built on a problem, threat or opportunity in another.
Related: You Have to Take Risks to Succeed. Here are 4 Benefits of Taking Risks in Business
It’s also a good idea to establish risk limits based on experience, says Frederic Kerrest, Okta’s founder and author of the book. Zero to IPO.
“You can’t ask someone to climb Mount Everest before they build a hill in their backyard,” he wrote.
Determining the project’s scale, budget and timeline will keep it out of control, as there will be circumstances under which the project must be executed.
I would argue that all of this takes courage. It’s much easier to shoot in the dark – or jump off a wall – and hope to get ahead. It is very difficult and requires a lot of work to objectively assess the facts and take informed action based on your findings. Sometimes, we don’t get the answers we want: There may not be a market for the product you wanted to create or the company you wanted to build. True courage is admitting the truth, regrouping and deciding where to go next.
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