Lessons You Can Learn From Billionaire Entrepreneurs About Risk
Billionaires are obviously doing something right. Otherwise, they wouldn’t be able to build such tremendous piles of wealth. But figuring out exactly why they are so successful is tricky, especially when it comes to risk. It’s often hard to see the decisions they don’t make when trying to figure out how they did it.
In this post, we take a look at some of the lessons you can learn from billionaire entrepreneurs and how you can apply them in your own business.
Only Do Things That Other People Think Are Risky
Economists often talk about how entrepreneurs are people who are somehow willing to take tasks that nobody else will. It’s just a matter of personality, they tell us.
But that’s not how entrepreneurs themselves see it at all. They’re just as risk-averse as the next person. They only appear to take risks because they can see opportunities that others can’t.
Thus, what might seem like a massive gamble to the average person is actually a surefire thing for the insightful business leader.
Always Manage Risk
Eventually, you will have to take on some risk as a business owner. But top-performing entrepreneurs always find ways to manage it.
This means choosing a business owners policy that covers all of the threats that you can’t avoid. You want insurance that protects you against public liability claims, property damage, and charges of professional misconduct.
Managing risk isn’t just a financial tool – it’s an emotional one as well. Entrepreneurs who have the cover they need free up their emotions and can make better decisions.
Diversify Your Product And Investment Portfolio
Some companies are successful in selling just one product. But most need to branch out to protect themselves from the vicissitudes of the market.
Remember, consumer preferences and tastes are changing all the time. And so companies that don’t roll with the punches often find themselves in dire financial circumstances.
The goal here is to spread the risk by offering different products for various niches and trading environments. As the famous proverb goes, you don’t want to put all your eggs in one basket.
The same is true if you’re building wealth via investments. By all means, run with individual stocks for a while, but know when to pull your money out.
Step Back From Companies As Soon As You Get A Buyer
Some billionaires stick it out with the same company, year after year. But the vast majority actually sell up the moment that they can.
Why do they do this?
The reason is that owning a single company is a very unstable form of wealth. It could go out of business at any time, and the value of the equity could go to zero.
When you sell a business, you can then diversify your portfolio and shed your risk. The chance that your company will fail is high. But the chances that dozens of companies you own in a stock portfolio will collapse is substantially less likely.
Use these billionaire risk-management lessons to your advantage and watch your wealth grow.