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[cryptohunter]

A company's willingness to take risks is a big deal in deciding how to get money for its operations and growth. Risk tolerance is about how much uncertainty or financial risk a company is okay with to reach its goals.

Companies that are cool with taking big risks might borrow a lot of money (debt) because it can make more money for the owners. But the downside is that they have to pay back the borrowed money no matter how well the company does.

On the flip side, companies that dont want to take too many risks might choose a safer way to get money, like selling shares (equity). This means they don't owe fixed amounts like with borrowing, but it could end up costing them more.

 

[kerryjoy]

I believe that when a business is trying to figure out how to make money, risk tolerance is crucial. Borrowing money can significantly accelerate a company's growth if it is willing to take risks, but it has a drawback in that the company must repay the loan at all costs. Selling shares, on the other hand, feels safer because there isn't any fixed debt, but you're essentially giving away a piece of the pie, which can add up over time. I suppose it all boils down to how eager a business is to expand quickly as opposed to being cautious and maintaining control. Unless I'm feeling very adventurous, I would probably lean toward steady growth.