Risk is inevitable as an entrepreneur. It is required to get your business where you want it to go. But just because it is required, doesn't mean you should go into business blindly expecting great success.
Victory comes down to those who choose to make smart decisions over taking dumb risks. Risk doesn't necessarily mean reward, so you must take careful steps and have persistent work invested to make an uncertain decision turn out in your favor.
Business has been around for centuries. The fundamental rules of business don't change but the tools and vehicles to succeed are what changes.
If you are taking a risk and not rooting it in the foundational history of what makes something successful, you are setting yourself up for failure. This path is what has led so many people to make the incorrect connection that all business is risky. But that simply isn't the case.
Here are two things you can do to turn risky behavior into safe and successful decisions.
1. Stick with what you know.
All business is not risky, as long as you are doing business in something you understand and where you are an expert.
Self-awareness is key even when it comes to taking risks. You must understand what you know, and be even more clear on what you don't know. Begin to understand if what you don't know is something you can learn quickly or whether you need to bring in someone to provide this knowledge and equip you with the right tools to make the best decisions.
I take risks with physical product businesses. At this stage in my career, I am not going off and starting a tech company. Why? Because I would have to learn a handful of skill sets I don't hold and I would have to immediately bring in other people to trust and create a fundamental strategy around. I would be blindly walking into risk, and that is the quickest path to failure.
Don't put yourself into the bullfight if you are not a bull.
2. Don't be lazy when it comes to learning.
A lot of people start a business or launch products without actually studying, learning or building off of the failures and mistakes others have already made. They don't follow proven structures.
Ray Dalio, a successful hedge fund owner, has been said to attribute a great amount of consistent success to his deep degree of study. In his book Principles, he discusses the discovery that every 30 years the same things were happening worldwide. He didn't look at one industry, in one country. Instead, he looked cross-culturally, cross-industry and cross-functionally to make educated decisions rooted in trends and facts. He isn't taking risks when he is investing, he is mitigating risk by doing the homework to turn it into a safe decision.
You can't be lazy when it comes to doing your research.
Too many entrepreneurs decide to rely on their ego or talent and the idea that they "can figure things out as they go" to find success. Ray Dalio couldn't say it better when in his book he wrote, "It is far more common for people to allow ego to stand in the way of learning."
Bravado and talent will only get you so far. There will come a point where all you have is what you know, and if you don't know anything, guess what, your business will quickly become nothing.
In this digital age, the amount of information readily available at your fingertips is unreal. Take it upon yourself to gain as much insight as possible and really learn how to learn. There is no excuse today for a lack of preparation.
Turning risk into reward really is a simple process as long as you stick to these two foundational actions. If you want to be the victor in business, stop believing you need to take wild risks and start preparing yourself to make educated decisions instead.