If you're in business and you never take risks it's unlikely you'll ever reach your full potential. You'll wonder why all your competitors are overtaking you even though you should be the industry leader, but the only difference might be the fact they're putting their money on the line even though they don't know if they'll come out on top.
It takes guts to reach the top and you need to be fearless, but slow down because I don't want you to get the wrong idea. I'm not suggesting you walk into a casino and put all your money on black. You would call that a crazy gamble rather than a risk and there is a huge chance you'll be left with nothing. Business owners should be smart enough to take calculated risks
What Is A Calculated Risk?
A calculated risk is completely different from an ordinary risk because it doesn't involve making a call at the flip of a coin. I know a calculated risk sounds like an oxymoron because the fact you're being calculated about a risk you're going to take still means you are taking a risk, but when you take a calculated risk there is a much higher chance of it paying off.
The EV Principle
Ask any professional poker player about EV (expected value) and they'll instantly know what it means, but it's also something big businesses will know all too well. When you're trying to make a calculated risk you can throw lots of numbers into an equation and it will either come out as EV or -EV. If you ever find yourself in a position where your research tells you it's a EV opportunity you should take the risk.
A Higher Chance Of Success
Let's say your employees have performed well and you decided to take them on holiday so they can relax in the sun. How do you know your last minute arrangements would turn out fine? Right now it's a risk you have to take and you'll find out when you arrive. Now look over your last 10 trips and you'll see 9 times out of 10 it was fine, so this means your holiday arrangement is EV.
Why You'll Always Win
Whenever you take calculated risks on EV opportunities you'll always win in the long run no matter how many calculated risks you need to take. So what is a calculated risk? It's a much easier path to business success as long as you do your homework.