How Can Active Risk Management Teach You to Face The Challenges Head-On?

How Can Active Risk Management Teach You to Face The Challenges Head-On?

How Can Active Risk Management

Startup owners are like the bungee jumpers and cliff divers of the business world. They are always ready for fresh challenges and they never back down from crossing a new hurdle to reach their goals. But how is it that only one in a million business owners are able to calculate the risks correctly and make sure that the scales tip towards profit?

Why should you make pro-active business decisions?

Business risk is not a new game. Every business owner has had to brave different kinds of risks involved with important decision making that decided the direction of their business and profits. If you are a business owner, you may have already found yourself at the crossroads of decision many a times. It is very necessary for businessmen to weigh pros and cons of a situation and think on their feet. The only difference between the startups that sink into oblivion each year and the ones that survive is a good businessman who can accurately understand and manage the risks involved with every decision making process.

A few things you can follow to minimize your loss while taking a risk

We are not asking you to play possum. In business, it can cost dearly if you are not flexible enough and if you don’t try out new things. You need to make new moves and try new gigs after weighing the costs against the returns. You might be wondering how it is possible for a newbie to approach risk successfully. Well, there is no “one way” that works for all. There are a few ways that almost work every time for every entrepreneur, old and new. Here are the 5 ways you can make sure you handle the immediate challenge the right way:

  • Accepting uncertainty as the new certainty

The only thing certain about the finances, sales and profit margin of a newly budding business is its uncertainty. While the market may seem a little predictable, profit and sales are products of a combination of a number of factors. Hence they remain untouched by all tools and instruments of prediction.

The key to success is not to view uncertainty as a risk. It is a path that may lead to a high margin of profit if followed correctly. Most of the entrepreneurs indeed set out on this path accepting the uncertainty that comes with it but then become inebriated with the fear of failure once losses start setting in.

  • Brushing up your theories on probability

Business is very much like a card game. You know your odds, now you need to guess your opponents cards right and make your move. Your intuitive abilities combined with your penchant for weighing your chances right contributes heavily towards your chances of winning big.

Again, the key is to be cautious. You should never bet more than you can afford to lose. A golden rule for gamblers is never to gamble drunk and the golden rule for entrepreneurs is to never take a risk out of anger or desperation. According to a recent study conducted by a student body from Harvard, your investment decision should be far from emotional; you should weigh the numbers in your favor before making any commitments.

You should weigh your chances in clear daylight before making your call. You should also have a few backup plans just in case the first one bites the dust. You should not chase losses, just like expert gamblers and you should research enough before placing your bet.

  • Looking at the brighter side of situations

This is a live application of the life-lemon theory. When life gives you lemons, you make lemonade and when business gives you challenges, you take them head-on. We have seen most risk savvy entrepreneurs take risks even without the exuberance of resources.

Most entrepreneurs play the chicken-egg game here. We have still not figure if marketing comes first or the profit, but all we know is, a few pioneering businessmen do not care about what usually comes first. They have been forging their own path whenever possible and whenever necessary. They are in the pursuit of success hiding in opportunities that are not conspicuous for the less savvy individuals. As a matter of fact, the cost of not following up a business opportunity is perceived to be way more than actually taking the risk by quite a few businessmen and we cannot help but side with them.

  • Learning to accept your burn-rate and acting on reducing it

If you are spending more than you are making your coffers will burn out and fast. If you think keeping your head down and moving on with your business plan simply because the numbers depress you is the right way to go about things, then you are doing it wrong.

Numbers are not supposed to elicit emotions. They are indicators of how well your business plan is suited for the current market. If your sales are dipping, then the numbers are telling you to devise a new marketing plan and possibly hire new marketing experts to make the maximum of upcoming opportunities.

Credit card consolidation is a very valid option if you find yourself standing at the brink of bankruptcy. According to Forbes, 9 out of 10 startups fail each year due to poor decision making. 90% of the startups declare bankruptcy within a year of starting out. Upon declaring bankruptcy your credit record will go bust for the coming 10 years at least and you won’t be eligible for new business loans from registered banks and credit unions. Weighing the pros and cons of available options in such a situation tells us that opting for consolidation loans is a much better options.

  • Working for yourself is the biggest training opportunity

We can understand how lost you may feel at times while making a decision on behalf of an entire company and its employees, but being your own boss is a delightful experience not many are privy to.

There are people who have always wanted to work 9 to 5 corporate jobs for the luxury and comfort that come with it, but only those with real courage can dream of owning his own business and sticking to that dream. Quitting a secure day job to begin a self-owned business is the biggest gamble that you can make. Millions of people go home hating their jobs every day, but only a few have the courage to do something about it! After that call, any other call should seem like a child’s play, provided you have the right support system beside you.

Starting your own business should have always been your aim if you have always wanted to be your own boss. No company, in its right mind, will give complete control of any office to an individual unless he or she has proven to be an asset to the company. This is a fairytale that comes true once in a million instances. Most people who aim at being the CEO of a company from their first day of employment are cut out to take risks. They should stop serving others and start with their own business ventures as soon as possible.

Most successful business men have asked one question for years, “What’s the risk of not starting my own business?” This is one question that has inspired and prompted thousands to get off their seats and chalk out plans to give shape to their dreams of owning a business.

Business is meant for risk takers who know what they are wagering against what prize. Unless you have a very good idea of the cost benefit ratio, you will never be able to make fully informed decisions about the future of your business investments and ventures. You need to be taking risks informedly and calculatedly. You should always assume a proactive stance when it comes to budget cuts, business expenses, employee costs and other factors. As the boss of your own business you have bestowed upon yourself the responsibility of making informed decisions that will decide your future and your employees’ future at one go.

Author Bio: Isabella Rossellini is a business credit counsellor with experience in debt management and dept consolidation. As a business writer, she analyzes loans and credit management. Learn more on her debt consolidation loans made easy blog.

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About Ana Maria De La Cruz

Ana Maria De La Cruz
I am professional experienced and entrepreneur focused on online media. At 4contentmedia, I lead business development initiatives driving audience acquisition, blogger and strategic relations. You can find more about me on