5 Reasons Why Entrepreneurs Take Risks

Last modified 22 March 2023
Estimated reading time: 4 minutes
5 Reasons Why Entrepreneurs Take Risks
Entrepreneurship is born from taking risk: following through on the decision to start a business is a risk itself. For entrepreneurs, taking risks and business growth go hand in hand. Entrepreneurs take risks on a regular basis, no matter how big or small they may be. This is not to say that entrepreneurs are inherently risk-takers just for the sake of it – successful risks are calculated and based on an underlying motivator. If you are interested in some of the most common reasons for risk-taking in the modern-day business world, see below for five.

5 Reasons why entrepreneurs should take risks

Mark Zuckerberg once said that “the only strategy that is guaranteed to fail is not taking any risks.” For entrepreneurs to launch and grow successful businesses, the need to take strategic risks is essential. Here are five reasons why entrepreneurs should be risk-takers.

1. Risks can be calculated

Smart entrepreneurs understand that there is a difference between taking a risk and gambling. When taking a major risk, it is important to calculate the potential results and have contingency plans in place. General George Patton put this perfectly when he said, “Take calculated risks. That is quite different from being rash”. While there are success stories of entrepreneurs taking the “ultimate” risk, no risk which could see your business go completely under is advised. Remember that for every one of these success stories you hear, there are dozens of stories of failure that you don’t.

2. You’ll never know until you try

For the majority of entrepreneurs, a risk is a case of “what if” and is seen as a means of advancing their business in some way. No matter how calculated it is, you can never be sure that a risk will pay off, however, there is only one way to find out. As Frederick Wilcox said, “Progress always involves risks. You can’t steal second base and keep your foot on first”. Anticipating the consequences of failing can hold many people back from taking a risk, but the entrepreneurial mindset embraces being able to anticipate the consequences of success and using that vision to motivate action. For many entrepreneurs, the rewards of a risk paying off will outweigh the costs of not succeeding. Fast-Track MBA call to action

3. Risk helps to distinguish between leaders and followers

Generally speaking, entrepreneurs take risks as it allows them to distinguish themselves from their competitors. In the competitive business environment that exists today, those who are willing to position themselves as risk-takers position themselves as leaders as well, while others get left behind. If you take a minute to think of a leader who you consider successful, chances are that they changed the way things were done for the better, and put themselves on the line during the process. This does not mean that all leaders take major risks on a regular basis, but it is safe to say that all leaders have taken at least one risk in their career which has helped them achieve their current position.

4. Without risk there is no innovation

Innovation cannot occur unless there is an element of risk to begin with. To innovate is to do something new, and you can never completely know all the consequences of doing something new. Hence, there cannot be innovation without some degree of risk. Whether it’s a new product or a change to existing practices – these will both be considered a risk. T.S. Eliot said, “Only those who will risk going too far can possibly find out how far it is possible to go”. When innovating, the level of risk can be mitigated by ensuring that all possible calculations have been made to evaluate whether it is the best option moving forward.

5. It is a chance to learn

Without risk, entrepreneurs will not experience failure and therefore will not learn from their mistakes. Many entrepreneurs understand that there are some small successes hidden within every failure. Of course it is possible to learn from positive experiences too, but it is the  failures we experience that teach us the most powerful lessons that tend to stay with us for life. In addition, taking risks teaches us important skills such as how to calculate contingencies as well as strategic thinking and planning.

How can you enhance your entrepreneurial risk-taking ability?

If you’re looking to sharpen your decision-making abilities, develop executive-level business acumen and take your career to the next level, the AIB Online MBA is the degree for you. Become a master of business with a nationally accredited and globally recognised Master of Business Administration degree behind your name. Can you think of any other reasons why entrepreneurs should take risks? While not every risk will pay off, many have proven to be highly successful. I’d love to hear of your experiences with risk throughout your career – both the good and the bad. Comment below to share your experiences. This article was written by Laura Hutton on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB. The following sources were used to compile this article: Huffington Post

*The Australian Institute of Business (AIB) is Australia’s largest provider of MBAs. Source Ready, B. (2023) Domestic Enrolments Surged During COVID After International Students Locked Out, MBA News. Available at: MBA News.


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