If a business wants to grow, especially early on, you have to be willing to take some risks.
The question is, how much risk and of what sort. Those answers are often driven by the balance sheet and ownership structure of the business.
If you’re bootstrapped, especially early, the whole business is at risk and any bad move can kill the business. As the business gets profitable you can afford to take more risks, but normally 1 or 2 at a time and have to manage very carefully, willing to cut bait quickly if needed.
If you’re VC backed and have a strong balance sheet, you have no choice but to take risks and lot’s of them, but you still need to have a deliberate plan around what those things are. The closer you are to profitability with a strong balance sheet the more risks you can take.
If you’re an owner operated profitable business every risk you take that doesn’t work is money directly out of your pocket. So, it depends on what the owner is optimizing for – cash or future valuation.
In each scenario though the risk needs to be deliberate, thoughtful, planned and expected results agreed to.
All these scenarios are different for different reasons. If you’re leading the business you have to understand this. If you work in the business, you also need to understand this, otherwise you have misalignment.
I’m not suggesting any is better than the other, you just have to know what environment you’re running / in.
