Risk-taking is an over-hyped, glamorous, made-for-the-movies concept that has lured more than one tyro and landed them in utter, debilitating bankruptcy. Themes such as get rich quick, overnight success, becoming a multi-millionaire before twenty-five - all get good press, and quicken the pulse of many - but also cause otherwise good businesses to take unnecessary risks. The best business brains however, wisely enough, work diligently towards minimizing risk in business by studying every opportunity carefully and investing only in those where the odds are stacked steeply in their favor.

Businesses get built over time - this allows a business to earn its name based on quality, reliability, trust and longevity. In its early years, the business lacks all of these - and thus must scrape by with the few opportunities that come its way. It is not uncommon for startups to be unprofitable for two to three years before they start showing some earnings. While thus strapped for profits, it will be completely unwise to bet the company on an unproven strategy from which it cannot recover - such as buying Superbowl advertisements as a method of marketing (many dot.com companies were guilty of this in 1999 and 2000).

Businesses have to constantly make decisions, but they don't have to remake their strategies - if they were well thought out in the first place. Straying from the strategy is often a huge reason why businesses end up taking unwarranted risks. Coca Cola Corp. has for over a century sold Coke as its main product, something that is well-loved and liked the world over. It is its profit center and brand name. The idea of introducing 'New Coke' was a 'straying from the strategy' misstep that resulted in a huge loss to the company. Tiffany, the high-end jeweler, strayed into the mid-market area, and made some profits - but began seeing brand erosion. Mercedes went through a similar cycle. These are large companies, with huge research and marketing teams working for them - but even they make missteps, losing sight of their overall strategy that made them successful. They all recovered before it cost them the company! For an example of a success story, Toyota Corp. is now positioned to become the largest and most profitable car company in the world. It has taken them 30+ years of effort building the most reliable cars in the world, constantly refining and fine-tuning their products - but minimizing risk by staying close to their core business strategy of building reliable cars. Now their name brand is associated with reliability, and they are outselling cars in the family market segment by a huge margin. Strategic. Focused. Low Risk.

Marketing is another area where minimizing risk is wise and goes a long way in controlling budget. The most effective form of marketing is one that is continuous, trackable and results-oriented. The least effective form is splashy and one-time. It is easy to go overboard in marketing, hoping to get a lot of new orders quickly. Quite the opposite is the case. You have to build a good product first, but then launch a multi-channel, low intensity beat that never lets up. Your target audience needs to see your name about 15-30 times before it even begins to register. It is extremely easy to splurge your money on radio and television commercials or on pay-per-click campaigns and not see the results you want. And soon enough, all that money is gone, and you are headed straight towards bankruptcy.

These are but two of the areas where it is easy to take unwarranted risks in business, and fall very flat. And yet this happens again and again and again. Perhaps it is in the DNA of every entrepreneur to be optimistic that forces him or her to learn things the hard way - but if you can minimize even some of the risks you take in your business, it can put you on the path to profitability a lot sooner - a whole lot sooner!