Taking Calculated Risks: How to Grow Your Business Without Gambling Everything
March 18, 2025 - JUDY WHALEN
Strategic Thinking - Growth
This Year's Theme: The Power of Your Entrepreneurial Mindset
Your Entrepreneurial Mindset is your invisible asset as you navigate the world of business...and life. Throughout the year, we will explore aspects of an entrepreneurial mindset and how it impacts your business.
Taking Calculated Risks: How to Grow Your Business Without Gambling Everything
What does it mean to be an entrepreneur? Entrepreneurship, at its core, is about taking risks. The very definition of an entrepreneur is "a person who organizes and operates a business, taking on greater than normal financial risks to do so." However, smart business owners don’t take reckless risks—they take calculated ones. This post explores how small business owners and solopreneurs can take risks that lead to growth while minimizing potential downsides.
What is Risk in Business?
Risk in business refers to uncertainty—the possibility that something might not go as planned. While many think of risk as purely financial, it also includes operational, strategic, and reputational risks. Understanding these different types of risks helps entrepreneurs make informed decisions.
- Operational Risk: Challenges in day-to-day business operations (e.g., supply chain disruptions, hiring issues).
- Strategic Risk: Taking bold moves that shape the future of the business (e.g., launching a new product, expanding into a new market).
- Reputational Risk: How the public perceives your business, which can be affected by marketing, customer service, or public relations missteps.
What Holds Us Back From Taking Risks?
Many people hesitate to take risks due to fear of failure, financial loss, or damaging their reputation. While these fears are valid, they can also prevent growth. The key is to develop a mindset that embraces risk as a learning experience, rather than something to avoid at all costs.
How Can We Determine If a Risk is Worth Taking
The best risks are those where the potential reward outweighs the downside.
Before making a decision, ask yourself:
- What is the best possible outcome?
- What is the worst possible outcome?
- How likely is each outcome?
- Can I handle the worst-case scenario?
- Are there ways to minimize the risk?
Real-World Case Studies: Calculated Risks in Action
Here are three stories of small business owners who took calculated risks—some successfully, some with hard lessons learned.
1. Strategic & Operational Risk: Launching a New Product
Cheri Garcia, inventor and founder of Luminous Envy took a high-stakes financial and operational risk by borrowing $38,000 to launch an innovative, glow-in-the-dark tanning bed. She validated market demand through early feedback and media attention before fully committing. The result? A successful product launch that turned into a profitable venture.
Lesson: When launching something new, ensure there's demand validation before making large investments.
2. Operational Risk: Expanding a Business at the Wrong Time
Muna Nash, the owner of Lovejoy’s Tea Room took an operational and financial risk by signing a five-year lease on a new location in early 2020—right before the pandemic hit. Despite her experience in running tea rooms, she couldn’t foresee COVID-19, which forced closures and drastically reduced customer traffic. Although the business survived, the experience was a tough lesson in unpredictability.
Lesson: Even well-planned risks can go wrong due to external factors. Having contingency plans and financial cushions is key.
3. Reputational Risk: Navigating a Social Media Crisis
A small business faced reputational damage when an employee’s controversial personal social media post went viral, affecting the company’s public image. The business owner acted quickly by engaging a crisis management firm, issuing clear statements, and reassuring partners and customers. This proactive response prevented major long-term damage.
Lesson: Protect your reputation proactively by having crisis management plans and clear communication strategies in place.
Steps to Assess a Risk Before Taking Action
Before taking any risk, consider using structured decision-making tools:
- Risk vs. Reward Matrix: Helps weigh the potential upside versus possible losses.
- SWOT Analysis: Identifies strengths, weaknesses, opportunities, and threats.
- Decision Tree Model: Maps out possible outcomes based on different choices.
- Pre-Mortem Analysis: Helps anticipate worst-case scenarios before they happen.
To help you put this into practice, get the RISK and REWARD Worksheet Packet. It includes three worksheets:
1. RISK and REWARD Assessment Worksheet
2. RISK and REWARD Matrix
3. SWOT Analysis
Take Action Activity: Assess and Take a Small Risk
Instead of overthinking, take a small, manageable risk to build your confidence. Download the RISK and REWARD Worksheet Packet below to help you:
✅ Identify a potential opportunity or decision.
✅ Assess the risks and rewards using structured frameworks.
✅ Plan small steps to minimize uncertainty.
✅ Track and reflect on the outcome to improve future decision-making.
Get the Risk Assessment Worksheet Here!
By taking small, calculated risks regularly, you’ll build your confidence, gain experience, and position your business for long-term growth. What risk will you take this week?
NEXT: Reflection and Planning
Measuring your progress can be easy or hard. The Baseline Worksheet is a simple way to track your progress weekly, monthly, or quarterly. This simple-to-use worksheet can be done without any fancy software. Or if you have software that tracks your data, you can use the worksheet and insert your data. It is designed to be used pen to paper because that process benefits the neural connection to your brain. It improves cognitive functioning and memory capabilities, helps release creativity, and helps you to articulate thoughts more clearly. Plus it can be done anytime - even when the power goes out and batteries die. It is designed to promote strategic thinking as well as tactical thinking.
Hi! I'm Judy
I've been in business 30+ years serving business owners and nonprofit leaders. They hire me to guide them in developing growth strategies, gain clarity about their priorities, take consistent action, and measure their progress. I also offer Executive Coaching and online programs.
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