We all know that taking risks can feel scary--especially when it comes to business. But there's evidence that pairing calculated risks with a sound risk management strategy can be (very) good for business.
So long as proposed risks serve your company's mission and you're comfortable with the fact that things might not pan out exactly as you'd planned (or on the exact timeline you'd hoped for), risks can be a way to innovate your brand, jumpstart your business' growth, or keep it from going under. Need proof? Look no further than these five companies, all of which capitalized on big risks to achieve remarkable success.
Dollar Shave Club
The popular direct-to-consumer shaving products company took a number of risks as a young business--and it all culminated in the company's $1 billion dollar acquisition by massive body products brand Unilever.
For starters, Dollar Shave Club basically pioneered an entirely new market. They were inventing the wheel as an e-commerce startup in the razor industry, and it paid off--the company already has more than three million customers and now accounts for over 10% of the razor market.
Additionally, the company invested in an aggressive and edgy marketing strategy right out of the gate. Despite having yet to turn a profit, Dollar Shave Club has invested in TV commercials--including wildly expensive Super Bowl ad space--to advertise its products, a move virtually unheard of among other bootstrapping startups.
While it may be on the cutting edge of technology, the home security industry is hardly known for its innovative business practices. So virtually anything that defies "business as usual" can be considered a risk.
For Frontpoint, that risk took the form of eschewing the industry-standard "fear mongering marketing" and high-pressure sales tactics. Instead, the company has chosen to emphasize investments in new technologies (including remote monitoring) and high-quality customer service.
It seems people were ready for this consumer-friendly approach: Since the company was founded in 2007, it's earned glowing customer reviews and an A+ Better Business Bureau rating, and it's considered a legitimate competitor of home security giants ADT and Vivint.
Spanx founder Sara Blakeley isn't the first woman entrepreneur to face hostile opposition to her business plan. So it's upsetting but perhaps not exceptional that Blakeley was dismissed by lawyers for having a "crazy" idea.
To wit: Blakeley thought that pantyhose should be seamless and help slim and shape women who wanted that option. In spite of having virtually no support (and very little business experience), Blakeley decided to pursue writing a patent on her own and move forward with the business--all without the help of outside investors.
It was a risk that paid off in spades. Spanx is now one of the most well-known brands in the hosiery industry and is worth approximately $1 billion. Blakeley, meanwhile, is the youngest self-made female billionaire to appear on Forbe's World's Billionaires list.
The Saatva Company
Saatva hasn't taken just one risk as a company--it's taken them again and again. In fact, you might say that anti-establishment principles underlie virtually every move the company makes.
For starters, the online mattress retailer chose to target consumers over the age of 35--a bold move in a consumer climate dominated by millennial aesthetics and preferences. Saatva has further defied convention by choosing to grow on a bootstrap budget rather than seeking funding, which would require the team to be beholden to investors. Last but not least (and in spite of advice to the contrary), Saatva has launched multiple different brands under the same Saatva umbrella.
Each one of these risks has contributed to the company's success. Saatva boasted $180 million in revenue last year, and its newest brand (Zenhaven) topped $100,000 in sales in its first weekend alone. All told, Saatva has earned distinction as the seventh-fastest growing private retailer in the U.S.
Whole Foods Market
The biggest risk Whole Foods Market co-founders Renee Lawson Hardy, John Mackey, Craig Weller, and Mark Skiles made with their business was to start it in the first place. These days, you can find natural food stores in virtually any metropolitan area (and even many not-so-metropolitan areas), and most grocery store chains have whole sections devoted to natural and organic lines.
But back in the 1970s, local and/or organic food options weren't really on the national radar. Still, the co-founders dared to leave their already-successful grocery store businesses and invest in a supermarket devoted exclusively to natural foods. I don't have to tell you this decision paid off: Whole Foods is now one of the most successful supermarkets on the national stage.
Each of these companies took huge risks--and instead of succeeding in spite of them, they succeeded because of them. Of course, the moral of the story here isn't that businesses should start taking risks willy-nilly and hope that one of them sticks. The point is simply that when your gut, your data, and/or your finances demand trying something new, it might behoove you to go ahead and do it.