How to Take Calculated Risks in Business to Reduce Losses 1

As a business owner, you have to be willing to take risks. Risk defines entrepreneurialism. But not all risk is equal. That’s where you have to take some time and make some careful decisions regarding which risks present the highest reward for the effort.

You may have heard the term “risk adjusted return on investment”. While we’re going to avoid the complexities of injecting alpha, beta, and Sharpe ratios into risk assessment, the point is to make a deliberate process of looking at what risks yield the highest reward but also give you the ability to control as much as possible.

Think of all the opportunities that stand before you. Increasing your customer base may require you to spend some cash on postcards for direct mailing. Hiring employees may mean that you need to open up a line of credit at the bank. These calculated risks may be a bit frightening initially, but they can also benefit you to the fullest in the long run. If you want to have a successful business and accomplish plenty, you are going to need to make decisions that you may not have normally made before.

Think it Through

Before you take any sort of risk, always carefully think through everything. Outweigh the pros and cons of those risks. If the pros are plentiful, it makes sense to take such a risk, especially if it means the possibility of reducing losses for your business. Along with carefully thinking through everything, you may also want to set goals for yourself and your business.

Setting Goals

Grab a piece of paper and pen (or your laptop) and write down specific goals for yourself. Next, place reasonable dates for when you want to accomplish those goals. When you have goals put in place, you have something to work for and something that you are willing to take risks for, especially if you have a set deadline put in place. Just make sure that your goals and the time allotted are realistic so that you can achieve them.

Taking Charge

When you take risks, you are taking charge, which is something you have to do as a business owner anyway. Taking charge means that you are responsible for organizing your thoughts and gathering them together, and choosing which calculated risks should be taken for your business. Imagine if you never took a single risk for your business, where would your business be now? As mentioned above, if your risks make sense, then take a deep breath and dive in.

The fact of the matter is that when you are willing to take risks and think outside of the box, you are more likely to have success with your business ventures than a non-risk-taker. Weigh your risks carefully, set goals, and take charge. And remember that sometimes a risk may turn out to be a setback. If you continue learning from your mistakes and moving forward, though, your calculated risks will help you reduce losses in the long run.

Photo by The Fayj

About the Author Tara Hornor is Senior Editor for, and a former writer for Read more »

Click here to join the conversation (1 Comments)
RATE THIS ARTICLE 1 Star2 Stars3 Stars4 Stars5 Stars

How LivePlan makes your business more successful

LivePlan: Online Business Planning Software

If you're writing a business plan, you're in luck. Online business planning software makes it easier than ever before to put together a business plan for your business.

As you'll see in a moment, LivePlan is more than just business plan software, though. It's a knowledgable guide combined with a professional designer coupled with a financial wizard. It'll help you get over the three most common business hurdles with ease.

Let's take a look at those common hurdles, and see how producing a top-notch business plan sets your business up for success.

Click to continue