# Take calculated risks & grow

CA PANKAJ , 27 November 2014

Calculated risk- the word is enough to identify who are Entrepreneurs. Entrepreneurs are not risk takers, rather they are Calculated Risk takers. That differentiates them from the rest of crowd. One of the great professors Mr. Green from Babson College always said, “The Difference between the Calculated Risk takers and the Risk takers is the difference between the Success and Failure.”

When we look at its dictionary meaning its looks very complicated, but when we cut it down in small parts then it means:

Taking risks by evaluating it from each and every angle, analyzing first all perspective, making provision of worst case scenario, increasing chances of success by taking a decision  & by  reducing the vulnerability to risk exposure.

Calculated Risk is a finance and economics blog. It was started in early 2005 by former technology executive Bill McBride (pseudonym Calculated Risk), with frequent posts by Doris Dungey (under the pseudonym Tanta) until her death on November 30, 2008 from ovarian cancer. As an early predictor of the United States housing bubble, Calculated Risk developed a "cult following" and influence over US fiscal policy. In January 2009, it received approximately 75,000 page views a day, and was the top economics blog by traffic statistics.

One of the main factor on which Entrepreneurial growth depends is calculated risk. Unless & until he doesn’t start taking those risks he will not grow. Now the question arises how to calculate and analyze the risk part of any decision. Some of the ways to take calculated risks are as follows:

a. Have a positive mind set: First of all to be a successful entrepreneur have a positive and risk taking attitude. Remember one thing all things happen for a good, and will always happen for the good. Don’t be reluctant to take risk. Unless & until you may have risk taking attitude you can’t grow. If you don’t have that attitude, then develop it over the period of time.

b. Experience: As word suggest it significance, learn from past experiences and from other’s experiences also. Do not repeat the mistake from which once you have suffered.

c. Prudency:  One of the important fundamental concept of the accounting is PRUDENCY concept, which says make provision for the probable losses and realize profits only after realization. Apply that concept always while taking any business decision.

For eg: Let’s say Mr. A is running a food business i.e fast food outlet. Mr. A wants to introduce new variety/ taste food in the market. Now prudency concept says that made provision for the losses, i.e new product or variety food may not sell, then its cost, R& D cost on new taste, loss of reputation etc. And don’t realize the increase in sale before launching the new food in the market and after its successful sale.

d. Detailed analysis: Before taking any decision analyze it from every perspective i.e. monetary & non monetary, CB analysis, Trend analysis, and negative analysis from all angles.

e. Hire Experts: If you think you are unable to do think about a decision from all perspective then hire experts for doing the same work & you may continue to focus on your business.

f. Be proactive:  Always be pro-active if you are an entrepreneur, be intuitive and mould yourself as per the conditions.

So if we follow above mentioned things one can be benefited in our business in many ways :

1. Avoidance of unnecessary losses.

2. Increase in profitability.

3. Better decision making.

4. Better implementation.

5. Better execution.

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