Entrepreneurs called to be more 'risk taking/ risk-making'Sunday, July 14, 2019
By Kellaray Miles
“Are we naturally entrepreneurial or are we risk averse?” was a question posed by Jennifer Bailey, assistant professor at Babson College located in Massachusetts, when she addressed the Mona School of Business' 4th Business and Management conference on Wednesday.
The conference was held under the theme 'Delivering on the Promise of Entrepreneurship: Critical Perspectives on Research, Practice and thinking in the fourth economy'.
With so many people seeking to own and operate their own businesses and become entrepreneurs, how many really factor and focus on the nature of risks that they will have to encounter in getting to the next level; risks that could make or break their businesses.
Bailey noted that Jamaicans are naturally innovative and creative people who know how to “turn them hand and make fashion”, as such one is not alarmed by the vast number of people who are now seeking to become entrepreneurs and small business owners. It is in light of this reason that she is urging them to have keen business perceptions and be knowledgeable of how to assess associated risk.
In an interview with the Jamaica Observer, Bailey asserts that “every business in assessing its value has to quantify what value it thinks it can generate as even funders before providing funding wants to know of business ideas and value propositions. With that said, she firmly believes that the perception of risk is very important for entrepreneurs who are urged to weigh every situation and to make the best decisions for growth, even if its 'risk-taking/ risk-making' as she terms it. She pointed out that people tend to talk about risk in terms of what will be lost; this she thinks is not the best approach as risk is a two-sided coin.
She noted two types of risk, “upside risk and downside risk”; the former based on potential growth and the latter on all the uncertainties that may occur. In speaking about risk it includes all the potential uncertainties that may be faced by the business. This varies from financial uncertainty, to market uncertainty and even environmental uncertainties (depending on the nature of the business), all of which have the potential to affect both cost and revenue.
“Downside risk negates your profit while upside risk are those that will expand it”, she said. Bailey implored entrepreneurs to look at both because the person who can see what they are doing as potential game-changer are those people who will invest aggressively, which is the right move to go forward — aggressive and bold! She continues by saying that if “you half step you're only going to get halfway there”. She makes comparison by pointing out that these are some of the same principles that we apply to our personal lives, in our careers and relationships so that we can advance and better ourselves.
The rationale is, if entrepreneurs are willing to take less risk, for instance, spending less and not wanting to invest because of uncertainty, then they should be prepared to gain less. Seeking to take no risk may end up being “a missed opportunity to invest in global infrastructures, attract global markets and get the chance to dominate on the world stage to become the next Amazon or Uber”, she stated. For any business to have global impact, they have to be willing to invest a lot, which is sometimes a major risk. She highlighted that “some of the businesses that have gone public and have moved to become millionaires in Jamaica, are those people who have taken calculated risks as a means of moving their businesses to the next level”.
She further cautions that “if entrepreneurs are risk averse- see the worst and expect the worst — then they're going to remain conservative and not make bold moves”. This she believes will render them remaining as small and-medium sized businesses with minimal staff. In contrast, bold moves are what will push entrepreneurs to build great empires and have a huge market.
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