Given the unsettled business, political and social landscapes, it’s not surprising that many of our risk tolerances have shifted in a more conservative direction. Whether that’s permanent or just temporary is still to be determined, but risk tolerance plays a huge role in how we run our businesses.
As entrepreneurs, we all have varying risk tolerances and that changes over time depending on a variety of factors. Yet have you ever looked into your risk tolerance? Not to mention, what drives it? If not, you should.
There tend to be three primary influences when it comes to determining risk tolerance.
How bullish are you about your business? If you’re thinking favorably about your future prospects, you’re more likely to take risks that will help grow your business. Conversely, if you have worries about the months and years ahead, your interest in risk-taking is likely to be minimal.
How do you feel about what’s happening in the world? Optimists convinced that normality is around the corner see pandemic-caused disruption as an opportunity for growth. But pessimists probably just want to stay hunkered down for now.
Where does your personal financial situation stand? Some feel a rush when they put everything on the line. More conservative folks will want to protect their assets. Plus, there are plenty of people with a diminished financial condition these days.
There are no wrong answers, so honestly ask yourself what’s driving your mindset today.
I talk to a lot of business owners and recently surveyed a group about whether their risk tolerance was higher or lower now compared to before coronavirus (COVID-19).
The results were concerning:
It seems that many of us have lost our mojo.
Many of you reading this are longtime entrepreneurs who started their companies or multiple companies many years ago. I want you to think back to those days.
Do you remember your naïveté, determination, stubbornness and willingness to put it all on the line?
Do you remember people telling you that you weren’t going to succeed — and simply ignoring them and succeeding anyway?
Some of you might long for those days again, while others are shuddering at the mere thought. But whatever your emotions are now, that time was real and vital to your current success.
The challenge we now face is to reignite the entrepreneurial flame we had when we started. That will enable us to re-emerge better and more robust than we were before March 2020.
There has to be some level of risk we all take. Getting your mojo working again might require a deep inner conversation.
Or maybe you need to find a young entrepreneur to mentor. You can do that via a pitch competition found online or in your community. Go, listen and absorb the ideas and the energy. Then offer a helping hand. Remember that students sometimes are our best teachers by reminding us of what’s important in the first place. They often have the energy that jaded professionals lack.
Ami Kassar is the founder and CEO of MultiFunding, a Philadelphia-based consulting firm that specializes in helping business owners across the U.S. develop creative, cost-saving alternatives for their business debt needs and structure. He can be reached at ami@multifunding.com or multifunding.com.