Any person who has ever achieved anything meaningful would most likely agree that success requires dedication, hard work, sacrifice and risk taking: nothing comes easy and nothing is simply given to you.
The ability to take on inancial risk is very important when it comes to finding investors. When you ask an investor to invest in your start-up, you are essentially asking them to take a risk. If you, in return are not willing to take any financial risk, your investor won’t do so either. The ability to tolerate risk shows confidence, a quality that investors certainly consider. Furthermore, this helps you build a relationship of trust between your start-up and investors.
If you do not invest any of your own money into your business, this shows external investors that you are not confident about your start-up, and that you are not committed to its growth. If you are not confident in your product, don’t expect the investor to be.
It is true that not all risks end up in a great rewards: risks can sometimes lead to failure. Although this can result in financial setbacks, it is also an opportunity to learn from your mistakes. Sometimes, a financial setback can open new paths for your business, or provide you with different opportunities. Keep in mind that failure is not final. Business consultant Steve Siebold claims that “the bigger [entrepreneurs] are, the more they’ve typically failed”.
At some point, every start-up will have to deal with risks. They are an important tool to build relationships with investors, and can lead to significant economic growth. Remember that taking risks does not mean being careless: do your homework, understand the potential gains or losses, and analyze the situation before making a decision.Email This Post