But as a business owner, I can tell you that there are times when you need to break the rules. Entrepreneurship and risk-taking are inherently connected. Small business owners can reap huge rewards by committing to the right risks. Breaking the rules of business can lead to growth, an improved reputation, and an increased net profit.
How to break the rules of business
To take risks without slowing down your business, try the following tips.
Define your goals
It’s easy to get stuck in the rhythm of your day-to-day operations. You might justify doing things a certain way because that’s how you’ve always done them. But, your business can’t be stagnant and grow at the same time. The business milestones you want to reach might not be possible with your current systems.
Set specific goals for your business to accomplish. For example, you might want to increase your sales base by X number of dollars over the course of a year.
Determine the risks associated with accomplishing your goals. Weigh the possible setbacks of the risk against the rewards it could bring.
What can you afford to lose?
You need to make sure your business can sustain itself if the risk doesn’t turn out the way you’d hoped. Only break the rules if you can handle the consequences. Avoid putting all your chips on the table, unless the risk has a significant chance of being successful.
Being optimistic about your business decisions is great, but not all risks pay off. Some of the risks you take will fail, so you need to be prepared. Have a plan for situations when you can’t pay short-term expenses, make payroll, or cover your tax liabilities. Set up a business cash reserve to act as a safety net. If the risk falls through, you have funds to lean on.
Pro tip: One business rule you shouldn’t break is saving enough cash to cover at least six months’ worth of expenses.
Have a plan
Breaking the rules can be a smart choice for business if you plan first. The better you strategize, the less dangerous the risk becomes. Plan out each step before you break the rules of business.
Keep in mind that risks can be small or large. And, there are different kinds of risks. Calculable risks are often predictable. You can use past data to infer the outcome. Ambiguous risks usually involve more factors, so there are more unknowns involved. Do a small business risk assessment to fully understand what you’re getting into.
Understanding the kind of risk you are taking can help you make decisions. Avoid taking on too much risk at once. It might be a good idea to start small.
Make your move
Once you’re ready to break the rules, don’t be afraid to take the leap. Getting out of your comfort zone is tough. But chances are, you’ve already had to for business. Going into business in the first place was a risk. You gave up the certainty of a nine-to-five paycheck to be your own boss.
Now that your business is established, you can take on more risks in order to grow. Pay attention as you break the rules of business, and look for situations that require you to adjust your plan.
Evaluate the risk
One of the keys to running a successful business is to learn from your risk-taking. Evaluate the results of the risks you take for business. Did breaking the rules help or hurt your company?
Compare the outcome of your risk-taking to your goals. If the risk helped you meet or surpass your goals, it was likely successful.
Use evaluations about risk-taking to make smart business decisions in the future. Discuss the risk with team members who were involved. Come up with a plan for handling future risks.
