Every year, Forbes releases its yearly World’s billionaire list. These are business tycoons, heads of industries, and entrepreneurs in the 1 percentile category. While most people are quick to see the immense wealth amassed by these individuals, one thing that has always fascinated me is the level of risk and vulnerability that led them to where they are today. Take Jeff Bezos for example;

If you didn’t already know, Jeff Bezos has always been a high flyer right from time. He graduated summa cum laude from Princeton University and later got a job with a startup called Fitel after turning down two job offers from Intel and Bell Labs. A risky move considering that Fitel was only a startup while Intel and Bell Labs were established companies where he would have job security. 

Bezos later left Fitel for hedge fund D.E Shaw and quickly rose through the ranks to the position of Senior vice president in just 4 years. This is an incredible feat; at this point, it is quite clear that Bezos would have a great career on Wall Street. But while most people will settle in and focus on building their careers at this point, Bezos made yet another risky decision - he resigned. 

Against all odds, Bezos decided to start his own company selling books online leaving behind a promising career on Wall Street. If this isn’t risky, I don’t know what else is. But as the saying goes, risk and innovation are two sides of the same coin. You all know the rest of the story of Amazon and how it has grown to become a behemoth today. 

Bezos isn’t the only wealthy entrepreneur who had to take a significant risk, the world of startups and entrepreneurship is full of stories like this that inspire but faced with a similar decision a lot of people will not quit their jobs. Yes, this isn’t a prerequisite to becoming a successful entrepreneur, but, if you decide to start a company, you must be ready to take risks, and here are 5 reasons why this is not such a bad thing.

1. It is an opportunity to learn

You don’t learn anything new in your comfort zones. When you take risks, you are aware of the fact that you don’t know what the outcome will be. This is uncomfortable and many people will prefer to stay within their comfort zones. These comfort zones could be a secure job (like a 9 - 5) or a small business. Whatever it is, growth doesn’t happen in comfort zones. You must be willing to step out of your comfort zone, which is risky, but that is the only way you get to learn. If you take a risk and succeed, that’s great and if you don’t succeed, that is also great. Why? Because you get to learn the most from failure. Each failed attempt tells you where the land mines are and how to avoid them. If you develop this attitude towards failure, then you won’t be afraid to take risks. Albeit, calculated risks and not reckless ones - more on this later. 

2. Risk is necessary for innovation 

Innovation is the process of creating something new. Startups are considered disruptive because they bring about innovative ideas and solutions to problems. But there is a measure of risk involved. One of the biggest fears of entrepreneurs is that there is a low demand for their products or service. If this happens, then all the planning, strategizing, and capital raised to fund the idea would be in vain. Nobody wants to have such an experience, but if an entrepreneur isn’t willing to risk it all, they may never know if their idea will ever become successful or not. 

For the most part, thorough market research should cover all the bases and minimize risk to an extent. And despite the downside of being innovative, it is something to behold when an innovative product or service breaks into the market and becomes exceedingly successful. Amazon was an innovative company that nearly crashed during the dotcom crash of 2000. Had the company failed, Bezos might have had to go back to his old job or start a new company. But Amazon survived the era and became one of the biggest players in the e-commerce sector. 

3. It builds confidence

Recall the adage that says “what doesn’t destroy you will only make you stronger” - this is true. Taking risks makes you vulnerable and indeed you may fail, but it also increases your chances of success. In addition to that, risk helps you build knowledge and experience two of the most important ingredients of leadership. As an entrepreneur, you are going to lead your employees and this means you need to be confident. 

You won’t have all the answers, but you have to be comfortable with putting yourself in uncomfortable situations in other to learn. Look at it this way, when you are willing to put yourself out there despite knowing you may fail, you become aware of your capabilities. In essence, you learn the boundaries of your strengths and weaknesses. Confidence is a collection of experience and experience is a collection of failures and successes. 

4. It is fulfilling 

“Better to try and fail than not try at all”

-Nicole Krauss

You don't want to go through life thinking to yourself “what if…”. What if you had taken the risk to start your company? What if you had made that investment? Maybe you would have failed but what if you succeeded? These thoughts will hunt you for the rest of your life. One of the reasons you should take calculated risks as a founder, entrepreneur, or investor is to avoid regrets later on in life. Here is what Jeff Bezos had to say in an interview;

“I don’t want to be 80 years old and in a quiet moment of reflection, thinking back over my life and cataloging a bunch of major regrets”. 

Of course, not all risks will be worth taking but part of the process is knowing which ones are worthwhile and which ones you should overlook. The main thing is knowing that you didn't let every opportunity (which sometimes presents itself as a risk) pass you by. In the end, you will feel fulfilled knowing that you took your chance in life. 

5. It can be rewarding

With proper risk management, you stand a chance of having a consistent streak of success. Sometimes the reward may take a while as was the case with Amazon. The company was founded in 1994 and didn't make any profit until 9 years later in 2003. This was a long-term strategy that Jeff Bezos had envisioned for the company. 9 years is an incredibly long time and while most people may not have the fortitude to wait so long, it is good to know that eventually, you will earn your reward. 

So what is a calculated risk?

You must have seen me use the words calculated risk many times in this article. Well, that is because it helps to differentiate between sheer recklessness. Calculated risk implies carefully weighing the outcomes of an action before undertaking it to give you a higher chance of success. This is why entrepreneurs are encouraged to do their research. With enough information, you can minimize the negative outcome of risk-taking by speculating on the outcome of your actions to a reasonable degree of certainty. You can then decide if it is worthwhile or not. 

Conclusion

The idea of putting yourself in an uncomfortable situation goes against our natural instinct. The reason is that we are uncertain about the outcome of our actions. For entrepreneurs, uncertainty is unavoidable and should even be embraced. To take advantage of the opportunities that come with risk, entrepreneurs must be willing to explore outside their comfort zones. However, you should do so only after doing your due diligence. 

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