Taking risks is beneficial for student entrepreneurs. Learn how to balance risk with opportunities to grow your business and include a calculated or thoughtful risk strategy into your business plan.
Being a risk-taker does not mean continually throwing caution to the wind! Student entrepreneurs and entrepreneurship majors should take risks but are encouraged to manage risk strategically. Successful entrepreneurs achieve success by lessening negative consequences using these tips and strategies.
Benefits of Risk-Taking for Student Entrepreneurs
You’ll find that balance is required throughout your business planning and goal-setting processes. You cannot achieve success without taking action, and nearly every business decision involves some type of risk. Your success will come from taking risks required to develop and grow your business while negating as many negative consequences as possible. You cannot live in fear of risk. You will not grow by standing frozen in place. The business environment is dynamic, and your solution must meet a continually evolving target market.
The benefits of overcoming your fear or risk and increasing your risk tolerance is long and includes:
- Strengthening Your Leadership Skills: Your leadership skills will develop as your decision-making capabilities and self-confidence grow.
- Increased Resilience: You’ll learn how to bounce back and adapt when you face setbacks and challenges!
- Self-development: Trial and error help you better understand your skillset so you can level up.
- Honing Your Innovative Thinking: You are likely known for coming up with creative solutions, and a risk strategy helps you identify opportunities that you may not have considered.
- Offering You First-Mover Advantage: Entrepreneurs who take risk have a shot at being first to market with a new product or service.
Utilizing a risk-taking strategy allows student entrepreneurs to grow personally and professionally. The decision-making process, as well as the risk-taking experiences, help you learn more about your industry and the challenges you will face. Student entrepreneurs who learn about risk-taking behavior as associated with their market gain a significant competitive edge in their industry.
Learn To Manage Risk
Managing risk by taking thoughtful or calculated risks is an important part of being a successful entrepreneur. You want to minimize the negative consequences by carefully weighing the potential risks versus rewards. Student entrepreneurs can and should make informed decisions to increase the likelihood of success.
Don’t allow the thought of failure to paralyze you. Keep Mark Zuckerberg’s initial trials in the back of your mind. He’s a huge success today, but his original plan to offer Facebook as a platform for university students did not create an overnight sensation. He believed in his idea, though, and continued to expand and develop the platform until it became the social media giant it is today.
Your strategy will allow you to evaluate a situation and create a thoughtful or calculated risk decision.
- Research. Investigate the market and gather as much information as possible before making a decision.
- Network. Gain insight and advice by talking with other entrepreneurs, mentors, and industry professionals.
- Plan. Develop a clear plan and timeline for implementing your idea, including potential obstacles and ways to overcome them.
- Manage risk. Identify the risks involved in your venture and develop strategies to mitigate them.
Develop Your Entrepreneurial Risk Tolerance
Develop a mindset where you anticipate and prepare to take risks.
- Embrace the failure that comes with embracing change. View failure as a learning opportunity rather than a setback.
- Knowing you are taking a managed approach, focus on your goal and the expected reward.
- Continue to take risks, even after experiencing failure, and use each experience to grow and learn.
- Remain optimistic, regardless of the outcome.
- As you gather your facts and thoughts, be open to experimentation and adapt your strategies as needed.
Taking risks is an important part of an entrepreneurship student’s growth and ability to innovate and ultimately succeed. By embracing risk-taking and learning from your experiences, student entrepreneurs will develop the skills and mindset needed to thrive in the uncertain world of business. Your strategic approach, paired with your positive attitude and self-confidence, will propel you forward, even when faced with challenges.
Different Types of Risk
You can read 5 different articles and find 5 different ways of classifying risk. As related to your business, we consider the following 3 types of risk:
Business risk can be strategic, the ability to generate profit, or relate to compliance and regulations.
Strategic risk involves areas such as your business readiness and the effects of competition. Compliance and regulatory risk relates to laws and regulations pertaining to your business. It includes your understanding of them and your willingness and ability to comply. Financial risks in this category are the factors impacting profitability of your business, including risks associated with operational costs, staffing, interest rates & penalties, and factors such as returns or customers who default on their payments.
Non-business risks are risks that are not within your control.
Non-business risks are those not directly associated with your business or business decisions. For example, these are risks may result from political and economic imbalances.
Financial risk speaks to managing debt and making wise longer-term investments.
Financial risk refers to your ability to manage debt. The risks involve interest rates you choose to pay and penalties, balancing wise investments, and making sound longer-term decisions that end up allowing you to make payments on time. It also includes the impact of understanding and the due diligence associated with having your basic financials in place. It’s important to minimize your risk associated with proper reporting and your prepared taxes.
Entrepreneurs Balance Types of Risk and Reward
Finding the right balance between risk and reward is essential for student entrepreneurs. Can you every simply take a leap of faith? Of course. While too much-uncalculated risk can result in failure, being overly cautious can lead to missed opportunities. Here are some tips for achieving the right balance:
- Prioritize. Determine which risks are worth taking and focus on those that have the potential for the greatest reward.
- Set realistic goals. Establish achievable goals for your venture and break them down into smaller steps to help you stay on track and mitigate potential risks.
- Monitor progress. Regularly review and assess your progress to identify any potential risks and adjust your strategies accordingly.
- Seek advice. Consult with mentors, peers, and industry professionals to gain insight and guidance on risk-taking and decision-making.
- Learn from experience. Reflect on past experiences, both successes and failures, to inform your future risk-taking decisions.
Student Entrepreneurs Whose Business Risks Led To Success
- Bill Gates dropped out of Harvard and co-founded Microsoft. Leaving Harvard in itself was taking a risk, but he believed in his plan to start a business. Microsoft went on to become one of the largest technology companies in the world.
Larry Page and Sergey Brin
- The founders of Google developed their revolutionary search engine while studying at Stanford University. They later dropped out of their Ph.D. programs to focus on growing the company, which has since become a global tech giant.
- Steve Jobs co-founded Apple while attending college. He faced many challenges, including being ousted from the company he founded, but Jobs understood market risk, and never stopped taking risks, and under his leadership, Apple became one of the world’s most valuable companies.
‘and did we mention Mark Zuckerberg? Imagine a life without his contribution.
These successful businesses were completely unique, new ventures when they launched. Potential opportunities are endless, so your future business strategy has every right to exist.
Entrepreneurship Student Resources
You are surrounded by resources. If you are still in school, take the opportunity to develop your risk management skills now. If you have already graduated or already launched your business, know it’s not too late. It’s never too late to practice and learn, and the sooner you do, the sooner you’ll be prepared to grow faster and at a steadier pace. You will always be faced with new hurdles and environmental changes related to your business, so do know these resources are still all out there and available to you.
- Mentorship Programs are an ideal way to develop your skill set. Your school may offer mentorship programs to connect you with experienced professionals who can provide guidance and advice. By now means are mentorships just for students, though. As we grow, we continue networking and learning, and you can seek out a mentor any time. Mentorships are so flexible, and mentors are all around you. Create a formal or informal plan of your own. Ask for help. It seems like a cold world sometimes, but people really do like to connect and help others.
- School, industry, and professional clubs and organizations help you network with like-minded peers and participate in events and workshops focused on starting and growing a business.
- Participating in business school competitions can provide valuable experience, feedback, and possibly even funding opportunities for student entrepreneurs. If you are out of school, you already have a lot to offer, so gain experience by participating as a mentor or judge.
- Schools often have incubator and accelerator programs. Seek them out and learn all you can about resources, mentorships, and funding to help startups grow and succeed. If you have graduated, access these programs as an alumni and find out what support applies to your situation and needs.
- Do your own research and find local and online resources. Take advantage of websites and blogs offering free advice and resources, and gain guidance on entrepreneurship, risk-taking strategies, and business development.
Smart young entrepreneurs position themselves as leaders and use resources such as these to propel their business forward!
It’s A Fact: Entrepreneurs Take Risks
Every business decision involves risk. It’s a fact that is especially important for student entrepreneurs to grasp, because new business cannot exist without it. As a business owner, it comes with the territory.
Starting your own business therefore will involve a level of risk. The amount of risk involved will be personal to your business, but do not fear it. Be willing to take risks to grow. Get comfortable with taking risks.
Your business growth depends upon your ability to make sound risk-related decisions, and it’s better to make those decisions based on fact or at least healthy assumptions. As we discussed, you want to take calculated risk or thoughtful risk whenever possible. Calculating the potential upside helps you avoid negative consequences so you succeed in your competitive business environment.
By embracing a risk management strategy, you’ll develop the skills and the mindset needed to succeed in your industry. Don’t try and learn everything the hard way. You do have resources, so seek them out and leverage them. Young entrepreneurs have the potential to make a significant economic impact and to even create brand new industries addressing needs consumers don’t even know they have… Yet! So, don’t be afraid to take risks. After all, as the saying goes, fortune favors the bold! You got this!