What risks are you willing to take?

Last month my husband did the ultimate New England skiing adventure and went to Tuckerman's Ravine. For those non-skiers out there, going to Tuckerman's is an annual pilgrimage for skiers who love the back country and the way skiing was meant to be - no lifts, no groomed trails, no amenities. Saying you have skied it earns you bragging rights and according to Brian, "It was a life changing experience."

So why did I not go? I love to ski. I love a challenge and bragging is not only something I enjoy, I teach workshops on it! Well, lets just say that the risk was not worth the reward. You see people die on that mountain, avalanches happen almost daily and the hike up is long and hard for only 10 minutes of downhill skiing bliss. Part of me wanted to go and the "chick" part of me wanted to stay home, get my nails done and meet my girlfriend for a drink. After assessing the risks and looking at the potential outcomes I decided to stay home and let the boys do this one solo.

We all have to determine the level of risk we are willing to take in life. In the financial world this is called "risk tolerance" and knowing yours will help you determine how you want to invest, save and spend your hard earned cash. There are many ways to assess risk tolerance. There are quizzes, test, questionnaires, and more. But they all come down to one central question: What value do you place on security and what are you willing to gamble to make some money?

As an entrepreneur I know you need to take risks to make it in the business world. Here are some tips on how to take calculated chances that will result in money in the bank:

Ask for a raise
Take the chance and ask your boss or your clients for a raise. Okay, I know it is a recession and I know money is tight, but your value increases every year. If increasing your pay rate is not possible, then ask for something else of value. For example, a girlfriend of mine negotiated time for skating lessons into her deal!

Invest money in your business
You need to put money into your business in order to make additional revenue. For many business owners this feels risky and overwhelming. Questions like where do I spend my resources, who can I trust to work for or with me, and what if I don't realize a good return on investment abound. Yes, it is scary for many of us to financially invest in our businesses, but it is necessary for us to reach our fiscal goals.

Hire a financial advisor
A year ago this would not be a risky proposition. With the economic turmoil and uncertainty brought on by corrupt financial advisors such as Bernie Madoff and others, it is hard to trust advisors with our money. But there are many caring and ethical financial professionals who will do right by you and your funds. Take the time to interview a few, get references and referrals from friends and then make the best decision for you and your business.

What risks are you willing to take in the next year and how might they pay off for you and your bottom line? Me? I am going to invest more money in my company, say yes to opportunities that excite me and seriously consider skiing Tuckerman's with boys next spring. Yes, the reward just might be worth the risk!

Written by Kathleen Burns Kingsbury, LMHC, CPCC.  For more information about her work, visit www.kbkconnections.com.

Comments

[Susan C Hammond]

Kathleen,
Great post. I would add another step though...if you aren't comfortable around and using financial information, if you are someone who hated math or thinks they don't have the math gene, do something to become more financially literate. Bad business decisions are often caused by a lack of understanding the financial affairs of your business.