How risk averse are you?
I realized that me and risk weren't natural friends back in college when I went to Atlantic City on an overnight bus trip. I lost the forty dollars I'd given myself permission to spend on the slot machines within the first thirty minutes of being there.
Determined not to lose any more of my hard earned money, I took myself out of the game and spent the rest of the night wandering around watching other people play. Boo.
Unfortunately, far too many entrepreneurs adopt the mindset I 'used to have' about risk. They shy away from placing necessary bets, to minimize their losses, rather than figuring out a way to maximize their wins.
That's a shame, because risk is part of the official definition of being an entrepreneur:
"A person who organizes and manages an enterprise, especially a business, usually with considerable initiative and risk."
Billy Murphy, founder of Forever Jobless is a serial entrepreneur who's built more than 20 eCommerce stores, and a multi-million dollar poker training and media company. As a former pro-poker player, he told me being comfortable with risk has been a major part of his success.
It's essential for your success too. Here are three ways to get better at taking the risks you need to grow your business.
1. Dig into the numbers
A major reason why people are risk averse, is because they are flying blind. Their risk strategy is based upon a hope and a prayer, rather than one that provides a true assessment of what the likelihood of payoff will be.
Billy says that isn't the way to approach it at all:
"Every decision you make in poker, there's a mathematical expectancy to the decisions that you make. So it gets you thinking about risk at a very high level, where you don't view it as risk, you view it as 'I have a 55% chance, and here's the money in the pot, and here's what's going to happen. It's very analytical."
Before you chase after an opportunity that seems promising, do your due diligence. Take a more analytical, and less emotional approach as to whether or not to move forward.
2. Let your goals be your guide
A lot of entrepreneurs are scared of losing their shirts. So they make decisions designed for them to not lose, instead of ones that move them closer to their big vision.
Billy's advice is to view every opportunity through the lens of your goals:
"I don't think I fear risk very much. A lot of people take that the wrong way. I'm not like a crazy gambler. It's more of I'm ok with failing, because if they line up with my goals, I'm ok with losing a bit of temporary money or time, it doesn't matter. It's much worse to pursue something that's "safe", if it doesn't get me to my goals. And I think that's the way a lot of people operate...It's better to start taking bets that actually make sense...take ten thousand that's a "risky bet" that's going to help you reach your goal. Take twenty thousand to make a bet to help you reach your goal."
As you try to evaluate whether or not to pursue a specific area, direct your attention on the goals you want to achieve, rather than the negative outcomes you want to avoid.
That doesn't mean you're ignoring potential downsides. It just puts you in the position to play smart offense that will help you score. Even with the best defense, you'll never win the game if you don't put any points on the board.
3. Place bets more often
After a quick round of losses, I took myself out of the game when it came to gambling in the casino. But like with most tasks, your skill and proficiency level get better the more times you do it.
Billy didn't start out being a master risk taker. He started small in the poker world, and worked his way up. Over time, he learned how to make better, more strategic bets and strengthened his risk tolerance along the way.
Here's what he says you'll learn as you start to do the same:
"The more people start taking these risks, they'll realize they aren't really risks. It's riskier to never risk anything and guarantee you'll lose the game."
Strengthen your risk taking muscle by placing more bets. Start small, learn from the experience, and then use those findings to help you get better the next time.
Risk is an inherent part of building a business. Instead of doing everything in your power to avoid it so you can hold on to what you have, use the strategies above to get smarter about taking them, so you can multiply your results exponentially.