Why “Take Risks” Is Terrible Advice

“Take risks. It’ll all work out.”

It sounds cool, right? Like something you’d hear from a startup guru or read on a motivational poster. But the problem is - this advice only works in hindsight.

Let’s say you’re launching a new product. You skip the market research, ignore the legal fine print, and dive in headfirst because, hey, “Fortune favors the bold!”

Six months later, you’re stuck in a lawsuit because your contract didn’t protect you. Or maybe you trusted the wrong partner, and now they’re holding your business hostage.

The truth is, that not all risks are created equal. Some move you forward. Others pull you under.

So let me share with you how to take smart risks - the kind that builds your business instead of sinking it.

The Risks That Actually Sink Businesses

The thing is, taking risks isn’t the problem. Taking dumb risks is.

Let me share with you a few examples of what this "dumb risk" is so that you can spot it better:

1. Signing a Bad Contract Without Reading the Fine Print

You land a big client, and they send over their “standard” contract. It looks professional, so you sign it without a second thought.

Six months later, you realize:

• They can terminate the contract with no notice, leaving you with unpaid work.

• You’re on the hook for unlimited liability if something goes wrong.

• They’re holding your payments for 90 days, strangling your cash flow.

Now a bad contract can wipe out years of hard work. You are not just losing money here, you are losing control of your entire business.

2. Trusting the Wrong Partner

You team up with a co-founder or vendor who seems perfect at first. But over time, they start making decisions without you, misusing funds, or even stealing your intellectual property.

A bad partner can derail your business, damage your reputation, and leave you stuck in legal battles.

3. Starting a Project with Zero Clear Terms

You agree to a project with a handshake deal. No contract, no milestones, and no payment terms.

Six months in, the client refuses to pay, claiming they’re unhappy with the results.

Without clear terms, you have no legal recourse. You’re left chasing payments and fixing problems for free.

How to Take Smart Risks

Taking risks is part of entrepreneurship. But the key is to minimize the downside while maximizing the upside. Here’s how I suggest you do it:

1. Read the Fine Print (Yes, All of It)

Before signing any contract, ask:

• Who owns the work? (Hint: It should be you.)

• What’s the liability cap? (Unlimited liability is a red flag.)

• What are the payment terms? (90-day payments can kill your cash flow.)

A strong contract protects you from worst-case scenarios. And no, you are not being paranoid here.

2. Vet Your Partners (Thoroughly)

Before teaming up with anyone, do your homework:

• Check their track record. Have they worked with other startups? What do their past clients say?

• Sign a partnership agreement. Define roles, responsibilities, and exit terms.

• Protect your IP. Make sure your intellectual property is legally yours.

A good partner can improve your growth. A bad one can destroy it.

3. Set Clear Terms for Every Project

No more handshake deals. Every project should have:

• A written agreement. Even a one-page contract is better than nothing.

• Milestones and payment terms. Example: 50% upfront, 30% at milestone #1, 20% on delivery.

• A dispute resolution process. Example: Mediation before litigation.

Clear terms prevent misunderstandings and protect you from non-payment.

Your Smart Risk Checklist

To sum it up, here's the checklist of what you can do to minimize your risks.

1. Contracts: Read the fine print. Cap your liability. Negotiate fair terms.

2. Partners: Vet them thoroughly. Sign a partnership agreement. Protect your IP.

3. Projects: Set clear terms. Use milestones. Include dispute resolution.

Final Thought: Risk Smart, Not Hard

Taking risks is part of building a business. But the entrepreneurs who win aren’t the ones who gamble blindly - they’re the ones who take calculated risks.

Now the next step I can suggest is to open your last contract and ask:  “Does this protect me, or just the other party?”

Review your partnerships: “Are they adding value, or creating risk?”

Look at your projects: “Do I have clear terms, or am I winging it?”

Because in business, the difference between success and failure isn’t luck - it’s preparation.