While on the surface, many view entrepreneurs to be gamblers, there are many things about them that say otherwise. It is true that starting a new business can be a big risk; however, launching after gathering the right amount of information (and making educated decisions) marks the difference between a gambler and an entrepreneur.
That is not to say there are not entrepreneurs who are also gamblers. Some think through pure entrepreneurial spirit and drive, they will be able to achieve boundless success. Yet, just taking risks may not always produce real results. Haphazard risk-taking might just bankrupt you.
What is required is calculated and careful risk-taking. Risks will be present in business, but it’s how you manage and face them that makes all the difference.
Tackling the Right Business Risks
Entrepreneurs know which risks are worth taking, and which should be avoided. This is what separates them from gamblers. They skillfully identify as many risks as possible and process them in the following way:
- For unavoidable risks, they try to tip the scales in their favor to place the effect those risks my carry elsewhere by sharing it with others or minimizing their effect.
- They breakdown risks into manageable pieces. Those pieces that work will receive more time and energy than those that do not.
- They avoid risks that lie outside the realm of their business. Why take on risks unnecessarily?
- Risks that cannot be avoided are dealt with head on. That is the spirit of the entrepreneur.
A gambler, on the other hand, is generally one that does not take the time to study the risks to help try and contain them. Yes, running a business means there will be risks, but that does not mean all risks must be addressed. Try doing this, and success will be fleeting.
Planning for The Road Less Traveled
Successful entrepreneurs do their homework before taking the next step. Entrepreneurs get into business with the goal of making it successful and hopes of growing it into the future. Their drive stems from a passion to take something unique and creative and turning it into something successful that meets the needs of consumers.
Their actions are not random. Every step they take, while riddled with risk, has purpose and planning behind it. Without those two pillars, steps can break down, having cataclysmic repercussions on the business.
A gambler is one who takes risks, putting all faith for success in the hands of chance, playing blackjack and other games online, and losing a lot of money in the process. There is no homework, no data collection, no educated guessing and no risk-management. The probability of success is almost nil when there is no foundation upon which to base the business.
Gamblers fail to plan (and be prepared) should risks need mitigation. That is where they differ the most from entrepreneurs.
Risk Takers vs. Risk Managers
Entrepreneurs and gamblers are both risk-takers. What provides the wide gap between the two is risk management. As described above, entrepreneurs take risks knowing full well what those risks entail, and design mitigation so a plan is in place to address them if needed.
Gamblers take on risks without an understanding of what they are and what effect they will have on their business. They completely leave to chance any repercussion the risk may have. Should the risk materialize, they would not have any plan in place to fix or put the fire out, let alone mitigate it.
Both may depend on some level of luck, but the gambler more so than the entrepreneur. Knowing that luck can play a role because not everything is in their hands. However placing the odds in their favor is what sets entrepreneurs far apart from gamblers.
This article has been edited and condensed.
Simon Crompton is a freelance journalist and entrepreneur, who spends the majority of his time blogging about business startups and consulting on web development. He has launched multiple online companies. He is also a dedicated follower of fashion, and has written for the Financial Times and GQ. Connect with @PermanentStle on Twitter.
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