Opinions expressed by Entrepreneur contributors are their own.
Key Takeaways
- Define the reward before the risk by writing down the three best outcomes, then ask what the worst realistic outcome is and whether the business could survive it.
- Build flexibility into every major decision — pilot before you commit, enter markets gradually — because the ability to adapt matters more than the original plan.
Entrepreneurs are often told that success comes from taking risks. The advice sounds inspiring, but the best leaders rarely take blind risks. They make informed decisions with measured risk.
Over the years, my brother Sterling and I have expanded healthcare companies, entered new markets, launched new service lines and managed through disruptions ranging from Hurricane Harvey to the pandemic. Along the way, I’ve learned that successful risk-taking is less about courage and more about structure.
Every major decision carries uncertainty. The challenge is determining which risks deserve pursuit and which deserve patience. Whenever I face a significant decision — an expansion, a partnership, a new investment, a strategic pivot — I rely on a simple three-part framework to evaluate the opportunity and the downside before moving forward.
Why most leaders struggle with risk
Many entrepreneurs fall into one of two categories. The first group moves too quickly. They become excited by an opportunity and focus almost entirely on the upside. Revenue projections look promising, the market appears attractive, the idea feels exciting. The second group becomes trapped by analysis. They spend months gathering information, building projections and waiting for certainty before acting.
Certainty rarely exists in business. But the alternative to waiting for it isn’t operating without knowledge. Effective leaders balance optimism with preparation: They pursue opportunities while planning for the setbacks that could occur along the way. That balance is the foundation of the framework below.
Part one: Evaluate the opportunity
The first question I ask is simple: What happens if this works?
Too many business owners evaluate risk without fully defining the reward. Before considering obstacles, I want to understand the opportunity itself. Does this decision move the company closer to its long-term vision? Will it create meaningful growth or strengthen existing capabilities?
When my brother and I evaluate expansion opportunities, we begin by asking whether the opportunity aligns with our broader mission. We are careful to avoid growth that creates complexity without advancing our long-term goals. A good opportunity should create leverage, not just more revenue.
One exercise I recommend is writing down the three best outcomes that could result from a decision. It forces you to think strategically rather than emotionally. If the upside is limited, the risk may never be worth taking.
Part two: Analyze the downside
The second part of the framework is about protection. I ask myself: What is the worst realistic outcome?
Notice I said realistic. I evaluate what could reasonably go wrong and whether the organization can absorb the impact.
During the pandemic, many business owners faced challenges they had never anticipated. Those with strong financial reserves, adaptable operations and contingency plans had far more options than those operating without safeguards. That experience reinforced one of my strongest business beliefs: Resilience is a competitive advantage.
Before taking a major risk, I work through four questions:
- How much capital could we lose?
- What operational challenges could emerge?
- How would this affect our team?
- Could we recover if the decision failed?
If the downside threatens the survival of the organization, I either restructure the opportunity or walk away. Protecting the downside keeps you in the game long enough to benefit from future opportunities.
Part three: Assess adaptability
The final component is flexibility. I always ask: Can we adjust if conditions change?
One lesson from periods of uncertainty is that adaptability often matters more than the original plan. During the pandemic, healthcare providers had to rethink how care was delivered. Those who adapted quickly recovered far faster than those waiting for conditions to return to normal. Whenever possible, I look for ways to reduce commitment while increasing learning. Can we test the concept before making a larger investment? Can we launch a pilot? Can we enter a market gradually instead of all at once?
The ability to pivot creates options, and options reduce risk.
Knowing when to pivot versus persevere
One of the hardest leadership decisions is whether to keep pushing or change direction. Many entrepreneurs quit too early. Others stay committed long after the evidence suggests a different path.
The key is separating temporary difficulty from structural problems. Temporary setbacks require persistence. Structural problems require adaptation. Persistence should always be tied to evidence: When data shows progress, continue. When evidence consistently points elsewhere, adapt.
Treat failure as information
Failure carries value if you are willing to study it. Too many people view unsuccessful outcomes as personal defeats. I prefer to view them as feedback. Every setback contains information about assumptions, execution, timing or strategy.
Some of our most valuable lessons came from situations that did not unfold as planned. Those experiences helped us build stronger systems, make better decisions and avoid bigger mistakes later.
After every major decision, successful or not, I conduct a simple review:
- What assumptions proved correct?
- What assumptions proved wrong?
- What would we do differently next time?
- What did we learn?
Leaders who consistently extract lessons from experience improve their decision-making over time.
Before your next major decision, evaluate the opportunity, analyze the downside and assess your ability to adapt. That simple framework has guided Sterling and me through expansions, market disruptions, partnerships and the hardest leadership calls of our careers.
Key Takeaways
- Define the reward before the risk by writing down the three best outcomes, then ask what the worst realistic outcome is and whether the business could survive it.
- Build flexibility into every major decision — pilot before you commit, enter markets gradually — because the ability to adapt matters more than the original plan.
Entrepreneurs are often told that success comes from taking risks. The advice sounds inspiring, but the best leaders rarely take blind risks. They make informed decisions with measured risk.
Over the years, my brother Sterling and I have expanded healthcare companies, entered new markets, launched new service lines and managed through disruptions ranging from Hurricane Harvey to the pandemic. Along the way, I’ve learned that successful risk-taking is less about courage and more about structure.
Every major decision carries uncertainty. The challenge is determining which risks deserve pursuit and which deserve patience. Whenever I face a significant decision — an expansion, a partnership, a new investment, a strategic pivot — I rely on a simple three-part framework to evaluate the opportunity and the downside before moving forward.
