by Will Russell, CEO of Russell Marketing and author of “Launch in 5: Take Your Idea from Lightbulb Moment to Profitable Business in Record Time”
What comes to mind when you think of “entrepreneurship?”
For most, the concept of risk stands out when they think about the life of an entrepreneur. Take, for example, often-quoted one-liners about starting a new business: “You miss 100 percent of the shots you don’t take,” (attributed to hockey star Wayne Gretzky); or “The biggest risk is not taking any risk” (Facebook’s Mark Zuckerberg, allegedly); and “To win without risk is to triumph without glory” (French dramatist Pierre Corneille). Popular wisdom has glamorized risk and deemed it necessary for a new idea to become a successful business.
Many in the world of startups suggest that risk and entrepreneurship are interconnected. As a result, would-be entrepreneurs are often driven to taking make-or-break risks, even when they can’t afford failure. In this pro-risk culture, many entrepreneurs make huge, often dangerous leaps because doing so — risking everything — is considered the norm.
Most risk is unnecessary for the vast majority of people starting a business. In reality, risk aversion — even in the high-roller, fast-paced world of entrepreneurship — ought to be recognized and defined more widely as an asset.
One edifying example of risk aversion put into practice by successful entrepreneurs is the story of the eyeglasses company, Warby Parker. In 2009, the founders approached the investor Adam Grant. But, because they weren’t working at their startup fulltime (they were students at the time) and had accepted jobs post-graduation as a backup plan, Grant assumed they weren’t committed enough and declined the offer.
With hindsight, Grant reflects: “When I compared the choices of the Warby Parker team to my mental model of the choices of successful entrepreneurs, they didn’t match… In my mind they were destined to fail… If they truly believed in Warby Parker, they should drop out to focus every waking hour on making it happen.” He continues: “But in fact, this is exactly why they succeeded.”
They didn’t go full steam ahead with only a Plan A, but instead they covered their bases, hedged their bets, and minimized the risk of failure.
How did the choice to be risk-averse turn out for them? Well, Warby Parker went public in 2021 and ended its first day of trading with a $6.8 billion valuation. Not too shabby for a pair of risk-averse entrepreneurs.
The message is clear: most successful entrepreneurs take the risk out of risk-taking. To reduce risk when developing and launching a new venture, a Five-Step High-Profit Launch System minimizes the consequences of failure by enabling new entrepreneurs to determine whether an idea will fly before massive amounts of money, time, and energy have been wasted.
If the stock market is dropping rapidly, Wall Street can halt all trading to avoid catastrophic losses. Entrepreneurs can do the same. The sooner they can determine whether or not people will actually pay money for the product or service, the sooner they can shut an idea down and move on to another one — saving yourself blood, sweat, money, and tears, and saving investors thousands or even millions of dollars.
The Five-Step High-Profit Launch System consists of five core steps:
1. Validation, research, and strategy.
Validation is about proving there’s a market for your idea and how much the market will be prepared to pay for it. The most recognized form of validation or product market fit is the focus group.
2. Audience acquisition.
Once the idea is validated, the next step is finding your potential customers and bringing them into a community. You want to launch with a bang not a whimper, so building an audience in advance of launch is important.
3. Audience engagement.
Beyond finding potential customers, you also need to get them excited. Sharing information with your community to ensure that potential customers are primed to buy the product once it launches increases the likelihood of early traction.
4. Audience conversion.
This is the big moment. It’s when potential customers become real-world customers.
5. Scale and optimize.
Once your idea is alive, you must think ahead. Scaling is all about ramping up your sales from first gear to fifth and building a foundation for future stability and growth.
While some risk may not be entirely avoidable — after all, life is full of risk — there’s a huge difference between taking risks because that’s what you think has to happen for success, and being smart about the risks you take on your path to success.
Whether you’re thinking about launching a product or brand for the first-time, or you’re an experienced entrepreneur, changing your mindset to a risk-averse approach, rather than a risky approach, will save you time, money, and heartache.
Will Russell is CEO of Russell Marketing, specializing in e-commerce launch marketing, which has helped hundreds of entrepreneurs validate their ideas and execute successful launches. He has been featured in Business Insider, Forbes, Crain’s New York, Indiegogo, StartUp Nation and more. His new book is, “Launch in 5: Take Your Idea from Lightbulb Moment to Profitable Business in Record Time“.
How The Most Successful Entrepreneurs Take The Risk Out Of Risk-Taking Republished from Source https://www.youngupstarts.com/2022/11/09/how-the-most-successful-entrepreneurs-take-the-risk-out-of-risk-taking/ via https://www.youngupstarts.com/feed/