Entrepreneurs know how to take risks. Do you?
Most people generally consider risk to be a four letter – something to be avoided and planned around at all costs. However, researchers that study entrepreneurial achievement have found that your ability to become the next Steve Jobs is determined in large part by your comfort level with risky decisions.
Not all risks are bad. Some can be very rewarding. The key is learning how to take them with stride.
While traditional business planning can help us identify risks, it does little to ease the jitters of taking leaps with imperfect information. For those watching from the sidelines, taking a cue from expert risk-takers can hold the key to getting in the game.
In recent years, science has come a long way in helping us understand what makes some people better wired to take risk leaps. A study out of Cambridge University in 2008 reveals that the ability to take risks is what separates entrepreneurs from other intelligent, equally experienced professional that find success in the corporate world.
Those that know how to take risks are impulsive. In business impulsivity becomes a bias to action. Impulsivity left to its own devices can lead to all sorts of trouble, but when combined with a personality that is adaptable and knows how to roll with the punches, it becomes a magic formula for taking leaps for gain.
While some are born winning the genetic lottery on this front – born with a mind that is wired to be impulsive and blessed with a personality that knows how to go with the flow – the rest of us can become better risk takers by observing those who do it well. With practice, it’s a skill that your brain will genuinely accept over time.
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Over the past two years as I conducted research for The Entrepreneurial Instinct book, I had the privilege of speaking with dozens of entrepreneurs and academics that specialize in the study of risk. To ignite your inner risk taker, try these five these five tips:
In everyday life, you can open doors to potential opportunities by saying ‘Yes’ to pretty much everything (you want to stay within the obvious boundaries of safety, of course). Implicit in saying “yes” is an optimism that quells loss aversion and turns on your brain’s reward center (side of the brain responsible for learning, focus and motivation). Even if you don’t know what’s behind the door you’ve opened, have faith that you will figure it out and take eliminate any risks one-by-one. Saying “yes” is a simple but powerful tool that will help you take that first leap—and the next, and the next.
To the adaptable personality, bad decisions are nothing more than roadblocks to be worked around. By keeping the cost of failure low and your agility high, you can put out the fires as they appear. It is better to make bad decisions and fix them as you go then to make no decisions at all.
“As much as knowledge is over-rated, religion is under-rated,” says Dr. Frank Murtha a New York-based counseling psychologist with a focus on investor psychology, behavioral finance, and financial risk taking. Maintaining faith that everything will be okay, whether it is supported by a belief in a higher power, contributes to your willingness to be adaptable. The most revered leaders, achievers and entrepreneurs of our time found success by way of many, many failures. If something matters to you, just do it. When the ride gets bumpy, keep doing it.
Participating in activities that build similar skills, even if they seem unrelated to business, can go a long way in creating an entrepreneurial risk-taker. If you play an instrument, tinker with an improvisational style. If karaoke is your cup of tea, stray from your song list and smile through whatever comes your way. Don’t just do it behind closed doors. Get used to rolling with the punches when others are watching.
Learn the Art of Quick Decision-Making
We are groomed to seek information when making decisions. But psychologists point out that asking too many questions can inhibit impulsive behavior. Instead, practice the art of making quick choices and adapting in a low-impact environment, such as a restaurant. Don’t obsess over the menu. Instead pick the first thing that strikes your interest. Wear something different every day. Push the boundaries of your comfort level until you realize it just doesn’t matter.
Spend Time with Other Risk Takers
You can’t discount the role of your environment and of your early experiences in your willingness to take risks. Those who surround themselves with people who are not experienced risk-takers will find that risk-aversion can be contagious. Attempting to get new-venture feedback from intelligent friends who have never taken a career risk may prove to be counterproductive.
Instead, surround yourself with people who have taken entrepreneurial risks. Most large cities offer business meet-ups and other networking events where like minds can gather. Also, be selective of the advice you seek.
Monica Mehta is the author of the new book The Entrepreneurial Instinct: How Everyone Has the Innate Ability to Start a Successful Small Business (McGraw-Hill | Sept 14, 2012) which explores the role or behavior and brain chemistry in our ability to take smart risks, thrive in ambiguity and be successful entrepreneurs. Read more from the author at monicamehta.com or follow her @monicamehtanyc
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