12 Entrepreneurs On the Big Risk They Took That Paid Off
If you’re not someone who can handle risks, then the life of an entrepreneur is likely not for you. Starting and running your own business requires the ability to take and manage serious risks. And, to be a successful entrepreneur , you need to be able to take on these risks and overcome whatever they throw at you. To help potential entrepreneurs with the daunting tasks they’ll face ahead, Seek Capital talked to 12 successful entrepreneurs about when they took a big risk that really ended up paying off. Read on to find out what risks these entrepreneurs took on and how doing so boosted their businesses.
1. Going All-In On Technology
"Around 2003, when the online marketing space was very new in the home services industry and every contractor I knew invested their marketing budget in yellow pages and print ads, I took the risk of investing every dollar we had into online marketing — when people around me kept telling me that the internet would not work,” said Idan Shpizear, CEO of 911 Restoration . “We invested in a website, online yellow pages and Google ads. We took every course we could find to learn more about how online lead generation works. It paid off greatly. In the first two years, we saw a 15-times return on investment, and by the time our competition caught up, we were ahead of the game."
2. Leaving One Startup to Start Another
“My biggest risk was leaving the firm I co-founded with three others and launching my own wealth advisory firm — especially since the reason I was launching the firm wasn't to have more autonomy or control of the business or an issue with my partners,” said Jeff Rose, CFP and CEO of Good Financial Cents . “The sole reason was so I would have fewer restrictions to focus on my personal finance blog ... It was a huge financial risk, but it has paid off increasingly well as revenue to the site has [increased] 10-times over the past four years surpassing $2.5 million.”
3. Asking Family Members for Money
“I literally had everything riding on the success of [a] project,” said Jonathan Faccone, founder of Halo Homebuyers . “I decided to ask my brother if he would co-sign a bank loan with me for $25,000 to make up the shortfall of monies that I needed. Keep in mind this was in the middle of the credit crunch when banks were reluctant to lend on any house related matters since the market had just crashed a few years prior. We finally did get the loan, and long story short, after a headache of a project — meaning going over budget, fighting with contractors on timelines and waiting for a buyer in the middle of wintertime — the project was successful.”
4. Taking on a Big Project
“We hired a new software developer and built out an entire separate platform, that we eventually spun off as a separate business. It was a risk because the employee worked for over a year on the tool — without generating income,” said Bobby Reed, CEO of Capitol Tech Solutions . “For a small business, it was a big undertaking and we gave up a lot of income for it. It took three years, but eventually, that business became our largest profit center.”
5. Being Really Transparent About Prices
“The promotional product industry has long made it standard practice to survive and thrive on hidden fees. Our company set out to change that in 2016 when we developed our No Surprise Pricing (NSP) technology. We’re the only company in our industry that tells customers exactly what they’re going to pay and when they’re going to get their order the moment they view a product,” said Bret Bonnet, co-founder and president of Quality Logo Products . “The downside of showing the cost for shipping, setup, tax etc. upfront is that our company inherently seems more expensive at first glance than the competition. Would customers appreciate or understand the transparency or instead opt for the artificially lower fee advertised by our competitors? That was the ultimate risk we took ... Now, two years later, No Surprise Pricing is a resounding success. The competition is scrambling to match our technology and customer offering, and our sales are up 15 percent year-over-year since inception. It was a risk that definitely paid off.” Read: 10 Skills Every Entrepreneur Should Have
6. Raising Prices
“After a few years in the industry, we figured out that our perceptions, of having a product at a relatively low price to achieve more sales, was totally wrong. It was an unwritten rule that offering a product or service at a lower price, compared to the competition price, would make the company look unprofessional, with a low-quality product,” said Stefan Chekanov, co-founder and CEO of Brosix . “We were afraid to raise our prices as we expected a significant drop in our sales. However, this never happened. Instead, we then had [a] wider chance to invest in building more features for our product and saw growth in many aspects of the business.” Related: 9 Ways to Increase Business Profits
7. Hiring an Outside Agency
“One of the biggest risks I took was hiring a digital marketing agency to help us with our website and online marketing. I had no knowledge in that area whatsoever, but I struggled to justify spending a significant amount of money on it since I did not know the outcome. We're a small business, so every dollar counts, and it took me a while to consider whether to go ahead with the decision or not,” said Saurabh Jindal, founder of Talk Travel . “Before deciding to hire them, our thoughts were if this didn't pay off or make a significant improvement, was that we would have to consider closing the business. The results have been excellent, and they continue to improve. Since hiring our digital marketing agency, our sales and in-store traffic have increased.”
8. Turning Down Investors’ Offers
“One of the biggest risks we've taken at CoinCorner was with regards to investment. We had both a venture capital company and a high-net-worth individual offering us the exact same offer, leaving us to decide which one to go with,” said Danny Scott, co-founder and CEO of CoinCorner . “After much consideration, there was one thing that helped us decide what to do — we were once told to only take funding if we really needed to, so we made the decision to take neither investment offer and continue alone. Of course, it was scary to not have financial backing, but it turned out the be the right decision — two and a half years later we are going strong and have expanded the team threefold.” Read: Here's the Average Entrepreneur Salary in Every State
9. Adding a New Part to Your Business
“The big risk that I took was taking what I learned for myself from investing in single-family homes and sharing it on podcasts. I didn't feel what I had to share was anything original but as it turned out everybody got really excited about how great my insights really were,” said Scott Royal Smith, founder and CEO of Royal Legal Solutions . “This helped blow up my business for years to come. Had I not done that I probably would never have had a successful business. Taking that one risk, changed everything for me. It came from believing in myself that I had something original to offer.”
10. Making a Big Purchase
“Our latest business venture a couple of years ago was to start manufacturing commercial-grade plastic columns and colonnades in-house by purchasing a bunch of molds. The molds cost us almost $100,000 upfront and we were coming off a slow season in business, so this was a huge risk for us. We financed this large purchase on a credit card,” said Kim Hawkins, president of Events Wholesale , an event and wedding planning company. “To minimize risk, we applied [for] a credit card with zero interest on purchases for 15 months. This allowed us to purchase almost $100,000 worth of columns on the card and pay everything off the following year — after we started bringing in more revenue — with no interest. We also received a cashback bonus and points that we can use towards travel for future conferences and trade shows. We knew, that although risky, this was a good move for our company since the columns and colonnades were already a best-selling product for us. We had to move quick before another company jumped on the opportunity.”
11. Committing Before You’re Ready
“I took the big risk of saying ‘yes’ to a big retailer so soon after launching my brand and before I was really ready to sell to a bigger market,” said Susan Tran, founder and CEO of The Cosmetics Fridge . “I did it because I understood that as an entrepreneur your entire adventure is based on risks big and small and if a great opportunity presents itself and you don't know what to do, just say yes and figure it out along the way. It forced me to learn fast and it also paid off by giving my brand credibility, which welcomed more opportunities.”
12. Hiring New People
“Hiring team members for my tutoring business. It was just me for the first year but when I realized I couldn't take on all the clients I wanted, I decided to hire,” said Schuyler Dunphy, founder of Seattle Tutoring Services . “At first, it was nerve-wracking with, one, new legal compliance issues; two, up-front costs with no guaranteed return; and three, limited control over how the work would be done. Ultimately it really paid off. Sure, there were things I wish I did differently, but I wouldn't have been able to grow much as a one-person company.”
The Bottom Line
Not everyone is naturally built to take risks. Fortunately, just because you don’t have the natural drive for taking risks does not mean you can’t be a successful entrepreneur. The ability to evaluate, take on and manage risks is a learnable skill, something that risk-averse people can develop in themselves with practice. More From Seek
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