Most entrepreneurs are born risk-takers. They understand that without risk, there can be no business, that without risk, they can reap no rewards. Risk, however, is a frightening proposition. It suggests danger, stress and the looming possibility of loss. Smart business owners know that risk has a brighter side, too, though. They know that, by definition, risk doesn't only suggest potential failure, but also potential success; they can tell the difference between a reckless risk and a responsible one by:

1. Calculating, analyzing and planning
2. Overcoming their fears
3. Adapting to change
4. Persisting in the face of failure

Action Steps
The best contacts and resources to help you get it done

Identify risks — and measure them

The best place to find risks is in your business plan. Comb your plan for risks and make a list of probable threats as well as potential opportunities. Within your list, separate responsible risks from reckless ones. Smart risks are those for which the potential gain is larger than the potential loss. Use a cost-benefit analysis to measure those gains and losses and to find out which is greater.

I recommend: Purchase and download a decision-making tool from BusinessCase.com that helps you measure potential return on investment (ROI). Review a cost-benefit analysis example from About.com.

Manage bad risks

Protect your company from potential losses by minimizing the harmful impact of bad risks. Small business insurance can defend your business against a slew of potential pitfalls.

I recommend: Visit the Hartford Financial Services Group's Web site, which has a section devoted to reducing the risks of your small business. It includes a number of tools and resources, such as an assessment tool to "Test Your Risk IQ" and an "E-Business Risk Analyzer."

Act on smart risks

Once you've identified an intelligent risk, take it. After all, you can't expect to benefit from an opportunity if you don't embrace it.

I recommend: Risk management can help you identify worthwhile risks and implement strategies for pursuing them; learn the ins and outs of risk management by downloading "The Risk Management Standard," which will help you accurately define and evaluate risks and related opportunities.

Evaluate results

Not all risks will prove successful. Analyze a risk's outcome in order to learn from any mistakes you might have made. The more risks you take, the more quickly you'll learn which ones are worth taking and which ones aren't.

I recommend: Risk management consultants — such as Protiviti and Marsh — can not only help you identify worthwhile risks, but they also can also help you measure after the fact whether those risks paid off as you'd hoped they would.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Having doubts about risks is healthy, but fearing them is not. Embrace your doubts as opportunities for analysis and eschew your fears as roadblocks to success.
• •  Some risks are bound to be good for business, while others are doomed for failure. Inherently bad risks include those that jeopardize your business's security, economic health or legal well-being. Inherently good risks are those that have long-term potential to grow your business and your bottom line.
• •  Essential to successful risk-taking is careful and early planning; have the courage to look beyond the immediate future and the foresight to determine if a risk will pay off in the long run.