Taking Business Related Risks: How Much is Too Much

Mika

VIP Contributor
When money is at stake, it is always risky. There is no such thing as full proof against risk, a business is always at risk even when the performance indicators show that the business is doing fairly well.

Whether you are a start-up or an established business, whether you are just beginning or an experienced businessman/woman, you are always at risk.

Well, when you are doing business, you need to take risks. But do you know where we draw the line? I mean how do we decide when to take a risk and when not to, or how much risk is too much and how much risk is okay?

Here lies the importance of taking calculated risks. Calculated risk means, you measure the pros and cons and you take a middle path. Calculated risk means you step into the water when you are perfectly aware of the depth.
 

Abigael

Valued Contributor
That is very good information about the risks involved in businesses. I totally agree with you that one should only take calculated risks and not jump into anything without first doing research about it. A calculated risk means you have learn enough about it such that you know ways that you can minimize the risk and benefit even with it.
 

Alexandoy

VIP Contributor
The usual risk in a retailing business is buying excess products for the stocks. That is a cushion in case there would be a shortage. But when the demand would suddenly run low then the excess stocks would just affect the cash flow. Another risk is doing too much marketing that didn't give good results. The expenses would hurt the cash flow.
 

Jasmine

VIP Contributor
How much risks you need to take depends on how much you can afford to lose. When you are taking risk, you will have to see if you can handle the debt when your business fails? If you cannot handle the debt, you should avoid the risk. Secondly, you also need to analyze your risk tolerance level.
 

Jonaville

Active member
I believe that risks also have grades. Some risks are not that risky, I mean that it might not affect the business productivity that much if things go wrong. On the other hand, there are some risks that one should be cautious about before taking it. If you know you can't handle the bad results, then maybe you should think twice.
 

Potter193

New member
When money is at stake, it is always risky. There is no such thing as full proof against risk, a business is always at risk even when the performance indicators show that the business is doing fairly well.

Whether you are a start-up or an established business, whether you are just beginning or an experienced businessman/woman, you are always at risk.

Well, when you are doing business, you need to take risks. But do you know where we draw the line? I mean how do we decide when to take a risk and when not to, or how much risk is too much and how much risk is okay?

Here lies the importance of taking calculated risks. Calculated risk means, you measure the pros and cons and you take a middle path. Calculated risk means you step into the water when you are perfectly aware of the depth.
Business is all about taking risks because is not 100% sure for you.
 

Mika

VIP Contributor
If you can pay back the debt, you can take a risk. let say you want to invest $1000 in your business. Let say your business failed and after liquidating the business assets, you still need $500 to payback the debt, if you can manage to pay back $500, you can take this kind of risk.
 

Good-Guy

VIP Contributor
Wise people often say that you must never invest more than what you could not afford to lose and this is my answer in a nutshell. If you think you can risk your capital and if you think that any kid of investment will definitely bring profit to you, then you must go for it.
 
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