Managing Risk
Managing Risk in Entrepreneurship
Reading through Bob Reiss’s chapter on “Managing Risk” has shifted my perspective on how entrepreneurs should approach uncertainty in business ventures. What caught my attention was Reiss’s distinction between risks that are “learning experiences” versus genuine threats to business survival—a nuanced view that challenges the traditional binary thinking about risk.
Key Insights That Resonated
The concept that risk is “in the eye of the beholder” particularly resonated with me. Reiss’s analogy comparing entrepreneurs to skiers highlighted how experience and preparation can transform what appears risky to outsiders into manageable challenges for those with proper knowledge and skills. This reframed my understanding: successful entrepreneurs don’t avoid risk entirely but rather develop expertise in identifying, understanding, and mitigating specific risks within their domain.
The practical strategies outlined—from converting fixed costs to variable costs to the importance of “staging risk”—provided concrete frameworks I hadn’t previously considered. The direct response industry example of testing with smaller mailing lists before full-scale launches demonstrates how risk can be systematically reduced through intelligent phasing of investments and commitments.
Personal Reflection on Risk Tolerance
Reiss’s discussion of personal risk tolerance made me examine my own comfort level with uncertainty. His point about entrepreneurs who “forge ahead because they don’t perceive risk” versus those who systematically analyze and manage it challenged me to consider which category I fall into. Am I making decisions based on genuine risk assessment, or am I either blindly optimistic or paralyzed by over-analysis?
The emphasis on external advice and mentorship also highlighted gaps in my current approach. While I often seek technical advice, I realize I haven’t consistently cultivated relationships with experienced entrepreneurs who could provide guidance on risk management decisions.
I’d welcome feedback from others who have read this material or faced similar challenges in managing entrepreneurial risk:
- What risk management strategies have you found most effective in your own ventures?
- How do you distinguish between productive risk-taking and reckless decision-making?
- Have you experienced situations where thorough risk analysis led to missed opportunities, or conversely, where inadequate risk assessment led to significant problems?
The intersection of calculated risk-taking and entrepreneurial success remains a complex challenge, and I believe continued conversations with fellow entrepreneurs are essential for developing better judgment in this area.
Works Cited:
Reiss, Bob, with Jeffrey L. Cruikshank. Low Risk, High Reward: Practical Prescriptions for Starting and Growing Your Business. R&R, 2000.
4 responses to “Reflection #3”
Bridgett,
Your example of reducing risks through intelligent phasing of investments and commitments struck a chord with me. A suggestion made to me in this graduate program (from Dr. Lahm and from our peer, Samantha Ellithorpe) is the option to start out small, such as renting space in someone else’s facility, to sell my service and/or product. That would eliminate a great portion of the overhead and would allow me to test my product/service in the market to assess the need before going fully fledged out on my own at a larger scale and greater cost. Ironically enough, as I was interviewing the owner of Asphalt Beach Skate Shop, Steve Larios, for our SME interview project in ENT 640, he suggested the same thing! The owner of the bicycle shop that he previously worked for told him to stay small; that he’d never make money (maybe just break-even) if he grew and Steve said he was right!
Right after writing the above part of my response to you, I read the second part of your reflection, your personal reflection on risk tolerance. The advice I got about starting small goes right in line with what you mentioned as far as realizing gaps in seeking advice and mentorship from experienced entrepreneurs. What a great realization you made for yourself! I was so excited Steve Larios agreed to do the interview and was excited to learn from him as an experienced owner of a business in the industry I’m interested in. I am excited for you (and me, too😊) to form more connections with experienced entrepreneurs. Just think about how helpful they can be, having lived the experience!
Hey Jenny,
Thank you so much for your thoughtful response! I love how you tied your own experience and advice from Dr. Lahm, Samantha, and Steve Larios into the conversation—there’s so much wisdom in starting small and testing the waters before scaling. That kind of strategic restraint can really protect both your finances and your confidence as you learn what works.
It’s amazing how those patterns of advice keep showing up—almost like a quiet chorus telling us to stay grounded, validate, and grow smart. I’m so glad your SME interview gave you that kind of clarity, and I completely agree with you: forming connections with experienced entrepreneurs is incredibly valuable. They offer not just advice but perspective that only comes from lived experience. I’m excited for both of us to keep learning from those who’ve walked the path before us!
Hi Bridgett,
Your reflection really stood out to me this week. I’ve been stressing about who I could even approach for the SME interviews—especially on topics like finance and feasibility. Reading your post made me realize how much I tend to stay within my own network, which, to be honest, rarely includes anyone who works closely with financial risk or uncertainty. That’s definitely an area I’ve avoided due to my risk tolerance and comfort level steering far away from those areas.
One of my goals this year was to push myself to connect more within my department, not just with the folks I have to talk to for work. Looking back now, I can actually see how much that’s changed. I’ve built stronger relationships, and it’s made a real difference in how supported I feel at work.
I also really appreciated your take on risk tolerance. What you said about risk looking different for everyone really hit home. Something that feels like a big leap for me might be routine for someone else. That’s such a powerful reminder that stepping outside your comfort zone can always valuable. Your post helped me realize that my networking goal doesn’t have to stay confined to just work—I can also use it to connect with people who align with the direction I want to grow in through this program.
Hi Meaghan,
Thank you so much for this thoughtful response! It’s really encouraging to hear that my reflection resonated with you, especially around the networking piece. I love how you connected it back to your own goal of expanding connections within your department – and it sounds like that’s already paying off in terms of feeling more supported at work.
It’s funny how we can get stuck in our comfort zones without even realizing it, especially around areas like finance that can feel intimidating. But you’re absolutely right that what feels scary to us might be second nature to someone else – and vice versa. That’s probably why those SME interviews can be so valuable, even if they feel daunting at first.
The idea of using networking not just for immediate work needs, but to connect with people who align with where you want to grow, I feel is a game changer. Also, when it comes to thinking about relationship-building, especially as we’re all navigating this program together.
Thanks for sharing your perspective – it’s got me thinking about my own networking blind spots too!
Bridgett