How Entreprenuers Can Cope With Uncertainty

An entrepreneur’s journey is full of surprises. We know it’s not always filled with fun and excitement. It’s a journey filled with pivots, obstacles, challenges, etc. But one of the main challenges many entrepreneurs face is how to cope with uncertainty.

Uncertainty is a quality to be cherished, therefore – if not for it, who would dare to undertake anything? Villiers de L'Isle-Adam

Entrepreneurs are often faced with a lot of risks and uncertainties. Richard Cantillon was one of the earliest in the history of Economics who not only identified the role of an entrepreneur in the economy, but also understood the uncertainty they are forced to cope with. In fact he stated in 1755 that entrepreneurs work on uncertain wages, whether they establish with or without capital.

Other examples may include inadequate financial capital for their businesses, the inability to cope with the ever fast changing technology, commercializing of products and services, hiring the right managers, coping with unstable economies or even addressing the uncertainty of potential stakeholders’ interests.

So how can entrepreneurs cope with uncertainty?

There is no straightforward answer to that question. Allow me to explain what I mean by that. You see, one obvious aspect we all need to understand is that humans do not respond to unfavourable circumstances in the same way. It’s that simple!

With uncertainty present and doing things, the actual execution of activity becomes in a real sense a secondary part of life. The primary problem or function is deciding what to do and how to do it"  Frank H. Knight; Risk, Uncertainty, and Profit [1921]

Frank Knight (1921) made a major contribution to help highlight the impact of risks and uncertainty in entrepreneurship. Indeed today the insurance market offers many ways in which certain risks can be covered. However, the presence of uncertainty if tied with business decisions that can impact an organization’s future, can be dangerous if stamped out properly and in a strategic manner.

Here are a few ways in which ways in which entrepreneurs can manage risks and survive uncertainty.

Entrepreneurial judgment and knowledge

It has been widely argued that entrepreneurs suffer from a lack of knowledge. In fact lack of knowledge and limited access to information has been quoted as one of the major reasons why entrepreneurs fail. Well, I do not disagree. ‘Lack of knowledge’ is broad and too general, so to speak. For example, some entrepreneurs may have an idea, but can’t figure out how to raise funds, bring in new business partners, how and where to market their products or service. Others have no idea how to hire and when to hire, for example.

The success of everything depends on intuition, the capacity of seeing things in a way which afterwards proves to be true, even though it cannot be established at the moment, and of grasping the essential fact, discarding the unessential, even though one can give no account of the principles by which this is done Joseph A Schumpeter

But times are changing. In fact, nowadays, there are many ways in which entrepreneurs- both in large and small organizations, can access and benefit from this knowledge economy. This can take place in various ways such as of taking advantage of the available mentorship programs, networking and knowledge sharing events, In-house and Outhouse training or hiring experts. Entrepreneurs can then choose to apply that knowledge to all their management levels.

In terms of perception and judgment, Economists such as Joseph A Schumpeter (1934)
had a strong view on superior entrepreneurial judgment. This is simply about entrepreneurs making strategic decisions by following their intuition and trusting their gut feelings. But be careful though. Following your guts as an entrepreneur is a good thing but in some situations, it may not guarantee you the results you may be anticipating.

Entrepreneurial foresight as central to business success

No one knows about tomorrow. But there’s something we can do today about tomorrow. A good example we can learn from is Henry Ford who founded a motor vehicle and revolutionized the car industry. Entrepreneurs can use the ability to “see ahead” and change the world around us in many ways. Is it a new product or service you think might improve or change our lives in a positive way?

Great leaders think beyond yesterday, deal with the issues of today and focus on addressing the problems of tomorrow. Gift Gugu Mona

Furthermore, if strategically applied, entrepreneurial foresight can also be of great use for organizations seeking to extend their business operations both domestically and across borders, provided there is a market for their products or services. The same concept can be translated into leadership and management practices especially in decision-making processes, coping with competition, hiring great talent, budgeting etc.

Entrepreneurial confidence

As mentioned earlier, foresight, great judgmental and knowledge skills are important in order to succeed in the world of uncertainty.  However, entrepreneurs must also exude confidence in order make things happen. Lows, self-confidence and doubts can harm a firm’s prosperity.

Lack of confidence often limits entrepreneurs from taking control or responsibility. Many successful entrepreneurs I have met believe in their businesses and in themselves and their ability to excel. Be careful though — make sure you’re not being overconfident.

With uncertainty absent, man's energies are devoted altogether to doing things. It is doubtful whether intelligence itself would exist in such a situation. In a world so built that perfect knowledge was theoretically possible. Frank H. Knight; Risk, Uncertainty, and Profit (1921)

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