No matter how a self-made person has become successful, every single one of them has one thing in common – at some point they asked “Why not?”, couldn’t come up with a good reason to not do it, and took a chance trying something new.
This is the hardest part in becoming successful for most people. Taking that risk, that chance, and not knowing if it will work out. Ironically, for some people, like myself, taking that leap into the unknown is the best part!
So let’s look at 2 different aspects of risk-taking:
- Why everyone, at some point in their life, needs to go out on a limb and do something for which they can’t guarantee the outcome.
- How to take that leap while hedging your bet to ensure success (while accepting failure).
Why we all need to take a flying leap.
Because that’s what makes us human. Nothing great was ever accomplished with out risk and effort. Nothing. I can’t even begin to count the number of times I’ve told myself (and others) that we’re all given one life, it’s up to us to choose if we’re going to live it. What does that mean? That means that you need to take that spontaneous trip this weekend not next. That means you need to write that children’s book you’ve always wanted to. That means you need to learn to paint or how to speak another language or how to fly an airplane. What? I thought this blog was about business? That’s exactly what I’m talking about. Why go through all the headache, heartache and hassles of buying, building, and selling a business if it doesn’t give you the freedom to live your entire life as you wish? Here’s an even better reason. When you learn to live your life in such a way that you regularly take small risks, the fear of taking that step toward not knowing where your next paycheck is coming from will be so much easier.
If that all sounds like the prescription that can only work for an adrenaline junky, consider this – there are no guarantees your next paycheck will be there anyway. With 9.4% unemployment in the US, massive layoffs, and over 120 banks closing in the US in the past year, even our most “secure” businesses can fail. At least with your own business you have the ability to control your own destiny. Beyond that, guess who’s going to be the last person to get laid off at your business? Obviously you. If your business currently supports 10 or 20 or 50 people, that can be quite a buffer for when times get tough. After all, it’s your choice who stays and goes.
But we don’t need to do it without a parachute.
When you’re ready to take that next step in your life you shouldn’t do so so recklessly that you guarantee and invite failure just for the adrenaline rush, battle scars, and the ability to say “well at least I tried.” So here’s what I’d recommend (and what I’ve done with my “risks”).
- Have a detailed, written, milestone and goal-oriented plan in place before you start. In other words, if you’re buying a business, know exactly what you’re going to do and how you’re going to do it to improve that business. Before it’s ever acquired you MUST have an exit strategy (and probably 2 or 3 in place). Granted, the plans never work out exactly as anticipated but that’s not the point. The point is when the world is falling in around you and you’re so overwhelmed by working IN your business, you can always pull out that list to help you get back on track. From personal experience I can say this step is invaluable. After all, this is the reason 300 businesses failed in NYC. You can learn a bit more about what questions entrepreneurs ask to formulate that business plan.
- Have liquid assets for a rainy day. Whether it’s to make that mortgage payment on your rental property when you don’t have tenants or because you can’t cash your paycheck until the next payment comes in, when you’re living on the edge you always need a cash buffer. Even if you are so good (or lucky) that you never have to use it, you’ll never regret having enough cash on hand to survive for at least 3-6 months with no income. This is one of the keys to generating wealth.
- Have a backup plan. As a matter of fact, have no less than 5 backup plans. 10 backup plans is probably better. Why? Because I can’t predict the future and neither can you. Just as in effective marketing, only the customer can tell you what’s the best ad, the same is true for any idea. If you’re quitting your job to go out on your own, you probably want to be working on a few ideas at all times. Of course we have all heard stories about the guy working from his mom’s basement for 3 years with little to no income to build a business (my grandfather did just that), but realistically, if you have a good business plan, and you’re working hard at marketing, and you have a good product or service and you’re not making money pretty quickly, you probably should do something else. Big public companies like Amazon.com and Ebay who lost millions before making a dime are exceptions to the rule and the complexity of structuring a public offering to generate enough capital to cover those losses is way beyond the scope of my simple blog. 🙂
- Accept and Expect Failure – That doesn’t sound real positive now does it? Why would we want to ever consider that? Aren’t we then programming ourselves for that exact failure? No, and here’s why. Expect and visualize being successful in your business or whatever risk you take at all times. However you must understand that no one successful did it on the first try. We all make mistakes and have a lot to learn. We all get rejected and one or 2 or 20 of our “bright ideas” fall flat on their faces. Whether that’s the marketing project that’s going to skyrocket your sales or the team incentive that’s going to double productivity, we’re going to miss the mark (and be all the wiser for it) at some point. Actually we’re going to miss the mark at a lot of points. As I always say, if you make a mistake and learn from it, it’s never a failure. Supposedly Edison failed over 6000 times at making the light bulb viable and remarked on the failures by saying “They taught something that I didn’t know. They taught me what direction to move in.” Entrepreneurs know there will be “failures” along the way and yet we know those lessons are just as valuable as the successes.
My last thought on the subject is again, Why Not? What’s the worst that can happen? You burn your time, energy, and cash reserves and then have to go get a job again? If you hedge your bet with the 4 suggestions above, even that would be unlikely but so what? Worse things have happened to far better people. Take that risk. Take that chance. Take that flying leap. Carpe Diem!
To your risk-taking success, Bryan