The Tortoise Vs The Hare: What Kind of Risk Taker are You?
Posted on 4th May 2017 in Business
Written by Freya Hughes
Business owners are generally accepted as the risk takers of the world. This, naturally, doesn’t apply to everyone, but having believed in your idea and invested your own finances into your business, you can see where this assumption comes from. You’ve got to have some degree of bravery to dive head first into a new venture. Let’s have a look at how risk is defined and how it can benefit and in some cases damage, your business. Do you rush into decisions or take your time with them? In this blog, we take a look at how business owners react to having to take risks.
We’ve heard the story countless times. We’ve learnt from The Tortoise & The Hare that slow and steady wins the race… But does it really? Mashable, true to form, have ensured we get a definitive answer by pitting these childhood characters against one another. I won’t spoil the 44 minutes and 33 seconds of pure video excitement, though. If your nerves can take it check it out for yourself here who the winner is of this age-old race. Anyway, let’s have a look at what it means to take risks, and why they’re a fundamental part of any start-up’s early life. You might find you’re the hare rushing into decisions, or the tortoise preferring to take more time over a decision. Once we’ve established which you are, let’s look at how to make your decision-making process more reliable with a little help from FUTRLI.
Are you a risk taker or risk averse?
- A risk taker will gamble their assets in the hope of achievement
- The risk averse would choose options that mean fewer risks, and prefer familiarity
It’s likely you’ll be an amalgamation of the two. For some, risk taking is fun. For others, it’s regarded as something to run to the hills from. You need some level of confidence to be able to make these big decisions in these early years. You don’t know what’s around each corner so using software to support your choices will enable you to do so without staying up half the night wondering if you did the right thing. Find out about Scenario planning here – it’s your best bet when deciding which course to take with a given problem.
There are also many types of risk, including: competitive, technological, political, economical and financial. The list really does go on, however let’s focus on the latter two types. In business we know that the financial state of your start-up is often turbulent. Outcomes of your spending habits can’t always be predicted. By plugging in your current data, then inputting what you’d like (and what you expect) will happen is going to give you a great idea of where you stand and how you can tweak spends to prevent financial stress. There’s a lot to be said about taking a minute or two just to update your data and see if you really need that POS system that costs more than your monthly rent.
Are all entrepreneurs risk takers?
In short, we would say a resounding ‘Yes!’ It takes a brave type of person who is not scared to make life altering decisions to become a successful entrepreneur. You’ve likely gambled a lot of your time, finances and even health to get where you are today, so you can’t be that averse to risk taking! I think what’s really important here is to understand how you like to make decisions. If you’re naturally cautious and take your time over things, you’re the tortoise – armour and all.
Business advisor Alex Charfen puts forward his argument against entrepreneurs being risk takers. He says that entrepreneurs are, in fact, the most risk averse people he knows. As a business coach, he does have a point – and it’s his role to coax out this risky attitude so his clients achieve their targets. He says, “entrepreneurs don’t take risks – in fact, they mitigate risks. They know they’re going to be successful,” and goes on to detail the level of confidence he encounters. But this doesn’t apply to everyone as he thinks it does.
There are five million start-ups in the UK alone. How can every single one of these entrepreneurs know they’ll reach their second or third year in their chosen industry? This one-size fits all approach would be damaging more than anything else. Roll out said armour…
Some entrepreneurs’ experiences will be more smooth sailing than others, but it’s undeniable that a degree of uncertainty has accompanied each decision. Have you rushed to say yes, or considered something so long that the moment has passed you by? Taking care in your decisions is, of course, the wisest advice anyone can share. Be aware of the balance between the frantic hare and the slow tortoise. Planning where and how you spend each penny that comes into your bank account is going to give your business the strength to make it to each financial finish line.
What risks should you expect to come up against?
There’s a myriad of risks waiting to be undertaken at each corner of your business. You’ll be waving goodbye to your steady paychecks, so it’s paramount to get the cash rolling in. When you do start to see investors’ money flow in how will you spend it? Is it to be reinvested in another area of the business or will you be using it to compensate staff or helpers? Next is that help – have you got a partner or trusted member of staff that’s seen you through thick and thin? It’s probably time to give them a financial reward.
Donating your personal time, wealth and even health are all things that are expected from you. Nearing a deadline but not on course for your target? The buck stops with you so you’ll need to be pulling longer hours so next month won’t start at a loss. As Entrepreneur.com puts it: “The rewards of entrepreneurship often outweigh these personal risks, but you have to be prepared to live this type of lifestyle.”
So, if you’re racing ahead or lagging behind, remember: this isn’t anyone’s race, it’s yours. Protect your business the best way you can and plan for the future. Then, you’re setting pace for your own success.