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Dealing with a risk of failure: Risk and startup go hand in hand! Even the best business plans suffer because no one can predict reality at high accuracy. I’m still fascinated as to how founders find the energy and conviction to work amidst this risk to succeed. This makes me have huge respect for the entrepreneurs around the world who’ve produced some magical things in the past and continue to do so. The beauty of being an entrepreneur is about managing your risk appetite and ensuring that you’re protected through the process.

It is true that there is no gain without pain. But the one lesson I learn the hard way was to try and protect yourself emotionally as much as possible. It is easy to get completely consumed in the startup journey and ignore your wellbeing. But please find a way to manage this or else the price you pay will be far more expensive than what you gain from a startup.

“If you tune it so that you have zero chance of failure, you usually also have zero chance of success. The key is to look at ways for when you get to your failure checkpoint, you know to stop.”

-Reid Hoffman, cofounder of LinkedIn

Attitude towards dealing with the risk of failure

A part of the big failing is our attitude and definitions of failures. For a long time, I used to get personally affected by every simple and small failure. And a part of me still says that I still get affected by failures on a daily basis.

But I suppose, it is an untrue world where none of these failures exist. If we want to play things really safe and not fail at all – EVER, then we are certainly looking at the wrong end of the barrel.

We all know that the risk and reward potentials are proportional. None of these risks are ever easy. The easiest thing to be is staying safe. It reminds me of the quote – A ship is always safe in the harbour, but that was not what it was built for.

This quote talks to me about – failure and feedback, success as a journey and process and finally about just getting up to do things. Talk is cheap, one can talk for all eternity and get nothing achieved – it is the results that make a difference.

Reducing chances of failure in a startup

Who enjoys failures? Poetically I might come up and say that I do enjoy failures, but they are a lot of pain. Failures mean that we have to face an unfavorable situation which we are never completely prepared for. They also mean that we are moving slightly further away from the goal on the timescale we had originally planned for.

The entrepreneurial world can get slightly cruel at times. I can recall a fair few situations where things have seemed bleak and success has been hard to come by. Even in cases where I thought that the chances of failure are less, I have been proved wrong. I guess such is life – we only have outcomes, our efforts and in hindsight a story of why things did not work the way we wanted.

If we are looking at a life with zero chance of failure, the utopia is probably much further from the truth than we are prepared to accept. And nothing ever comes from denial! – We can deny all we want, for all our life, but the results are the results – nothing beats the truth!

The Risk Reward Ratio in a startup

This is an often talked about aspect in every startup. The Risk Reward ratio – higher the potential of risk naturally means less competitors and a greater chance of failure.

If the rate of risk is low, naturally others would also want to participate. If I link this to Porter’s 5 forces – if the barriers of entry are small, then the risk of new entrants is huge. You will have to constantly look out for competitors.

It is logical simplicity isn’t it – if things are easy – more people want to do it and quite natural to the normal tendency which our minds react to isn’t it. As the risk profile increases, less people would be in your way.

This isn’t necessarily to mean that we should jump off a cliff because there are very few people doing it. It is always about the calculated risk about the things we can care about and try to make that count.

Feedback and learning from failure

The more I read and write about these quotes, one thing seems to be very clear – it is about the attitude to the situation. We are dealt with the set of cards we have. We can sit and whine about things such as

• If only I had more money or more time or resources and so on.. It is nothing more than wishful thinking. It is a fun place to be but that never gives us anything productive.
• If things are not working, it only means one thing – They are not working for us. We can sit back and then find a different way or decide to give up

• If we decide to give up, we find a way to live with it rather than letting it become a constant bane. We have to get good at moving on and moving away from things that don’t work for us.
• However, if we dare to continue, we better do a damn good job at it. For there is one and only one thing that is precious for all of us , TIME!

On that note, I can go on to write pages about feedback and using each one of the outcomes, but for now – I would like to retouch the quote of the day:

If you tune it so that you have zero chance of failure, you usually also have zero chance of success. The key is to look at ways for when you get to your failure checkpoint, you know to stop

-Reid Hoffman, cofounder of LinkedIn