Dealing With Risk
Steve Martin is President of Business Solutions, and one of our most valuable Brain Trust members. He joins me quite often on The Small Business Advocate Show to discuss topics that I call Management Fundamentals. The discussion we had during one of his visits covered the subject of "risk": what it is and how to deal with it.Steve says risk is "exposure to the chance of loss". If you're a small business owner you know that the element of risk is ever-present. You can lose a sale if you get greedy on a bid. If you don't charge enough you could lose money and put your business at risk. If you don't pay enough you could risk losing a valuable employee. You could lose your investment. You could lose your house. And you always risk failure. The small business owner's risk list is long. Very long.
Are you a risk taker? Everyone has a different risk threshold. Steve says regardless of where your risk threshold is, it can be managed through preparation and planning. Recognize where the risk elements are in any project or endeavor, and take the steps to minimize the risk.
Let's say you want to change your business's name. You might risk losing customers who can't find you in the phone book, or who won't like the new name. How do you minimize this risk? Ask them! Yeah, the customers. Get them involved in the process. Make the name change a marketing angle that creates some excitement. Or make the change over time. Introduce the new name with the old one, and over a period of a year or so, begin dropping the old one. Now you've reduced the risk by having a risk-minimizing plan.
Steve reminds us that you might be so risk-averse that you are not cut out for small business ownership. I agree. But before you give up on your dream or your idea, we both urge you to road-test a risk-minimizing plan. You might find that you can actually raise your risk threshold. Believe me, when that happens, it is exciting. And that feeling is one of the things that makes being a small business owner worth the risk.
Write this on a rock... Sometimes doing nothing can be riskier than taking a chance.
