Why Risk Taking Matters in Entrepreneurship
For any business to grow, someone must try something new—even when there’s a chance of failing. Risk taking is a central part of entrepreneurship. It drives ideas forward, helps business grow, and builds success stories. This guide is for Nigerian students and working-class entrepreneurs at the start of their journey. It shows why risk matters, how to take it smartly, and what to watch out for.
What Is Risk Taking in Business?
Risk taking means making decisions that don’t guarantee success. It means acting even though there is fear, uncertainty, or imperfect information. But it’s not blind risk—it is thoughtful and often planned.
Southwestern scholars say every business decision carries risk—like losing money, harming reputation, or going down the wrong path.
Why Entrepreneurs Need to Take Risks to Grow
Entrepreneur Peter Thiel told Facebook’s Mark Zuckerberg: “In a world that’s changing so quickly, the biggest risk you can take is not taking any risk.”
Starting a business means leaving a stable job—already a risk. But without these choices, there’s rarely a reward. Entrepreneurs who do not risk things usually never make big growth.
The Big Reward of Calculated Risks
Calculated risks are smart, planned risks—not shooting in the dark.
“Each entrepreneur should take risk,” says Forbes, “but weigh risk against reward, plan carefully, do research, and decide based on facts rather than feelings”.
Risks Fuel Innovation and Fresh Ideas
According to multiple experts, risks drive new ideas and growth. Major inventions like Edison’s lightbulb or Tesla’s Model S succeeded because someone tried despite uncertainty.
Risk takers push change, spark fresh thinking, and make new products—from e-commerce to ride-sharing.
Risk Taking Builds Learning, Resilience, and Experience
Taking risks—even if things don’t go right—brings valuable lessons.
Failures teach us what went wrong, how to fix it, and shape smarter strategies next time. They build resilience—a key trait of successful business owners.
How Risk Taking Sparks Opportunity and Competitive Advantage
Entrepreneurs who risk when others won’t gain big opportunity. Being first in new space gives you a big edge.
Also:
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It shows your team you’re serious and bold.
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It invites investors who like high‑potential ventures.
Making Smart, Calculated Risks — Not Like a Gamble
You don’t need blind bravery—intelligent risk works better.
Forbes says only take risk when you understand the situation. Use facts, weigh pros and cons, do SWOT (Strengths, Weaknesses, Opportunities, Threats), and avoid impulsive choices.
A Reddit post summed it up:
“Taking calculated risk is better than not being afraid to take risk.”
Calculating risk means analyzing, planning—not acting recklessly.
Types of Risks Entrepreneurs Face
Identifying and managing risk types helps you act smart:
Financial Risk
Using your own money or loan without guarantee of return.
Market Risk
Maybe customers don’t want your product—or competition is fierce.
Operational Risk
Day-to-day problems like supply issues, staff, or tech failure.
Reputational Risk
Bad reviews or public negativity can harm your brand.
Technology & Strategic Risks
Picking the wrong tech or not adapting to change may cost big.
Examples of Entrepreneurs Who Benefited by Taking Risks
| Entrepreneur | Risk Taken | Outcome & Lesson |
|---|---|---|
| Elon Musk | Invested fortune in rockets and electric cars | Success in Tesla, SpaceX with bold risk |
| Sara Blakely | Spent $5,000 savings to launch Spanx | Became a globally recognized brand |
| Richard Branson | Launched into airlines and space tourism | Built Virgin empire through daring moves. |
| Jeff Bezos | Expanded Amazon beyond books | Created e-commerce giant. |
How to Take Smart Risks as a Nigerian Student or Working Person
Step-by-Step Guide
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Identify a real problem: What do people around you need?
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Start small: Test a simple idea before investing big.
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Research well: Ask local friends, pre-sell, read market trends.
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Do a mini SWOT: Write your Strengths, Weaknesses, Opportunities, Threats.
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Plan for failure: What’s worst case? Can you handle it?
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Decide smartly: Use facts, not fear.
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Try quickly: Fast action helps you learn faster.
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Reflect and adapt: Write lessons learned and make next plan better.
Reddit wisdom: “Calculate worst case scenario… risk management matters.”
Another says: “Not taking risk is itself a risk.”
Pros and Cons of Risk Taking in Business
| Pros of Risk Taking | Cons of Risk Taking |
|---|---|
| Sparks innovation and new ideas | Possible financial loss |
| Leads to big growth and opportunities | Stress, anxiety, emotional toll |
| Builds learning, resilience, and adaptability | Business failure potentially affects family |
| Creates competitive edge | Reputation may suffer if things go wrong |
Comparing Safe vs. Risk-Taking Approaches in Entrepreneurship
| Approach | Safe (No Risk) | Risk-Taking Approach |
|---|---|---|
| Business Growth | Slow or no growth | Faster scale and innovation |
| Learning | Limited learning through safe paths | Big lessons from wins and failures |
| Market Edge | Hard to stand out | Strong differentiation |
| Personal Gain | Steady income but less potential | Potential big returns or failure |
| Emotional Cost | Low stress but may lack fulfillment | Stressful but meaningful |
Summary Table: Risk Benefits, Risks, and How to Handle Them
| Benefit of Risk | What Makes It Good | Main Risk | How to Manage It |
|---|---|---|---|
| Innovation | Sparks new ideas | Could fail to sell | Test small, gather feedback |
| Competitive Edge | Stand out from others | Others may copy or compete | Know your strengths and keep improving |
| Growth | Scale business | May lose money if not careful | Track finances, start small |
| Learning | Learn from mistakes | Mistakes can cost more | Reflect and learn from each experience |
| Personal Growth | Build confidence | Fear of failure holds back | Face small risks and build courage over time |
Frequently Asked Questions (FAQs)
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What is risk taking in entrepreneurship?
It means making choices that don’t guarantee success, but open doors to growth. -
Why is risk important in entrepreneurship?
Because it leads to innovation, growth, learning, and business advantage. -
Isn’t risk-taking dangerous for students or working people?
It can be if reckless. But when calculated, it opens smart opportunities. -
How can someone take risk if they have little money?
Start with small tests: talk to friends, pre-sell, use basic tools like WhatsApp. -
What does “calculated risk” mean?
It means you plan, gather facts, weigh outcomes, and control exposure before acting. -
What are common risks entrepreneurs face?
Financial, market, operational, reputational, and tech/strategic risks. -
How do I manage fear of failure?
Think of worst-case x can you handle it? Then see upside vs downside and decide. -
Can risk taking be done safely?
Yes—by starting small, testing, planning, and using feedback. -
What happens if a risk fails?
You learn. That knowledge helps your next step be stronger. -
Is not taking any risk also a risk?
Yes. Staying too safe often means missing opportunities to grow or succeed.
Conclusion: Step Wisely, but Step Boldly
In entrepreneurship, nothing new happens without someone taking a risk. For Nigerian students and working-class entrepreneurs, risk-taking is not reckless—it is careful, brave, and smart. Each calculated leap of faith plants a seed for progress.
Learn small, start smart, plan for the worst, and act carefully. Most importantly, step forward with courage. Your bold but thoughtful risk can become the start of something great.
