Risk Taking and Entrepreneurship: Executive

Risk Taking and Entrepreneurship: Executive Summery

Entrepreneurial action is by definition risky. There are many different types of risk and many ways to mitigate them. Traditionally, entrepreneurs have successfully employed certain tactics to reduce and eliminate excessive risk and the potential for failure. Entrepreneurs are looking to essentially trade risk for profit. Usually the more risk involved, the greater the potential payoff. But a balancing act must be set into motion for any entrepreneur to become successful. They also need to understand how to structure their businesses and management staff to avoid risk and compliment the business's goals and existing structures.

Monetary risk, or the risk of financial ruin keeps many would be entrepreneurs from starting a business in the first place. But if an entrepreneur calculates their own levels of risk as well as the dynamics of the market and product correctly, this type of risk can be averted, at least from a business plan failure standpoint. All businesses need to be on firm financial foundations. A competent management staff and proper handling of clients goes a long way in making or breaking a business. Each business is different, and by structuring it in a way that lower level employees are able to avoid risky decisions or situations, and by installing a skilled and competent management team, entrepreneurs can avoid much of the risk associated with lack of experience and understanding at the entry level.

The more knowledge of a market an entrepreneur has the better. This includes the litigious side of the market. When an entrepreneur sets up a business, even employing the proper employee dynamics, financial decisions and logistical moves, legal issues can doom the entire operation. Entrepreneurs can avoid much of this type of risk by fully understanding their business, and by having prior experience with the product or industry. It is important to understand as well that overseas markets are not the same as domestic ones, and many issues are likely to arise out of unique and different legal environments, exclusive to overseas markets and products. Entrepreneurship is a veritable minefield when it comes to risks. These risks are inherent, and without them there would not be the same kinds of satisfaction and payoff that occurs with them intact. When entrepreneurs are made fully aware of these risks and how to avoid them, they can more successfully navigate this minefield and become productive and often very wealthy.