Dealing with uncertainty is a big part of a startup founder’s life and it can be really challenging. Managing uncertainty is also a significant part of managing and leading a company. Without taking risks, you cannot achieve marginal rewards as a big part of entrepreneurship and investing is dealing with risk. This is why you have to know and be good at how to deal with uncertainty. I have put together a list of pointers to help business owners and founders in times of uncertainty. These will help you as a founder and leader to navigate better in times of uncertainty and volatility.
Know the 3 Types of Uncertainty
A lot of uncertainty comes from the change of a few conditions but the basic types of uncertainties are regulatory, market related, and economic. As a founder, you need to be aware of these three types of uncertainty. Market uncertainty is important since the market is the single biggest uncertainty you face as a startup and can simply destroy your dreams. Your capital and future have nothing to do with the market and at times the market can be unpredictable. Remember, business is all about dealing with risk and unpredictability but dealing with uncertainty and market volatility are major risks that you must be aware of. Regulatory uncertainties are important because you have very little or no control of these type of uncertainties. Economic uncertainty is different from market-related uncertainty. It refers to the situations when you don’t have enough information to make spending or investment decisions.
Take a Look at Your Own Risk Profile
A simple way to deal with uncertainty is to understand what your own personal risk profile is. This way, you can manage the uncertainty in a way that aligns to it. This will help you avoid making irrational decisions and implement business solutions that can help you manage your uncertainty. There are various things that you can be aware of that can help you. These include: What is your cash-flow forecast? How long will you be around? Can you pivot in a short period of time or continue to run the business as it is? What is your customer’s opinion of your product or service? What are your competitors doing? Are they doing what you are doing? Are they doing what you want to be doing? What are your financial projections? What is your revenue-yield? On top of these organizational decisions, sometimes the founder’s personal risk appetite is a big factor in times of uncertainty. It is important to analyze your own decisions in retrospect and have a better understanding of your personal risk appetite.
Recognize the Role of Others in Uncertain Times
When your own emotions start to run high, you need to recognize the role of your team in making sure that the work is not disrupted by your own emotional state. This will help to bring you back to reason and keep your company on the right track. Build a more emotionally intelligent team. Emotions can often spill over into making mistakes or even potentially bad decisions. You need to build an emotionally intelligent team of people. This is crucial in times of uncertainty because you need to create a culture where you are able to express emotions and be open about them. This is because when you are emotionally unbalanced, it is very hard for you to judge the situation in a clear way. Emotions are a powerful motivator and they also need to be respected in times of uncertainty.
Develop an Appropriate Response to Uncertainty
Whenever there is a big uncertainty in your life, you will need to understand it and deal with it as fast as possible. In fact, the function of biological life is to merely deal with the uncertainty of nature. Most importantly, you need to be able to do this fast. Uncertainty can appear a big part in your life as a leader. But, uncertainty is already a big part of our lives and your startup journey is not different. It is just as unpredictable as your personal life. You need to have a strategy that can help you be able to deal with it. There are a number of different ways to deal with uncertain life. Even simple frameworks such as “Cynefin” can help you greatly in making that choice. If you have a system, you will better identify the areas you can potentially fail at. The areas you can’t manage may be a lot more important than the ones you can.
Understanding how you deal with uncertainty and where you are putting your resources is a powerful way to achieve success in a volatile and uncertain environment. This will be a major area of focus for management in the months ahead.