As entrepreneurs, we all have different risk tolerances. And our risk tolerance changes over time. Have you ever thought about your risk tolerance, and what drives it?
Generally speaking, there are three primary influences behind risk tolerance.
- How bullish are you on your business? If you feel terrific and excited about your business and its prospects, you are more willing to take risks to grow it. If you are worried about your business or don’t love what you do, you are less likely to take risks.
- How do you feel about what’s happening in the world? Some entrepreneurs are convinced that the world will soon settle into a new normal and see this disruption as an opportunity. Others are fearful that things will get a lot worse before they get better.
- What is your personal financial situation? Some feel that they have a lot to lose by taking risks and protecting their assets. Others need to or get a rush from putting it all on the line.
So what is the primary driver behind your risk tolerance?