Every business involves taking risks. When are they good risks and when are they bad risks? This could easily be summarized by saying that any risk taken without a plan is a bad risk.
SPEND TIME IN DISCOVERY
With the rare exception, it can be said that the best risk takers are the best risk mitigators. These people often use the old SWOT acronym (strengths, weaknesses, opportunities, threats) and really spend time assessing those threats. They will understand the potential pitfalls and make a plan for minimizing them.
In the year 2019 there is no shortage of data. Take the time to do the research and make sure that the market supports your product. This quantitative data is out there and will take your risk level down significantly.
For example, when we were planning to expand our Yours Truly Media brand we did the research and found out that the average person was spending about $30,000 on a wedding. This data allowed us to know where our price points fit and were our brand could be supported.
On top of that, we decided to add in the qualitative factor. This included us visiting our new districts and assuring that the data was backed up by real life scenarios. For example, if brides in Texas (our potentially new location) were indeed spending $30k on weddings, but $25k of that was on a venue, our model would never work in that location.
By doing all of this research upfront, you allow yourself to be in the best position possible to take the needed risks.
PUT IN A BUDGET AND A DEATH DATE
In order for anything to work effectively there must be a budget and a plan in place. Simply jumping into something without the necessary tools in place is a recipe for disaster.
When setting out on a new venture it is important to put some metrics for success into place. Part of those metrics are a contingency plan to pull the plug if things do not work out. This doesn’t mean giving up all together, but reassessing and moving on to plan b.
The most difficult part about this is actually following through on your death date. As a business leader you are invested in this idea on multiple levels, including an emotional level. This often makes it difficult to actually follow through with reworking the plan or perhaps even cutting it altogether. This requires discipline and support for this to work well.
Don’t let passion blind you! Don’t be afraid to take a step back and move forward in a different direction
Throughout this entire process it is imperative to have someone (or multiple people) by your side advising you. These trusted advisors will be able to give you an outside, honest perspective on your business that is vital to success. While it may seem necessary if you find yourself in a difficult place, bringing them on board early on may save you a lot of headaches.