A life without risk is a life without growth.
Looking back over the years I can see that my path has been what one might call “the road less traveled”. For me, risk and reward are inexorably linked and I have never worried about the possible consequences of zigging where most people zag. Of course this is the mindset of an invincible young man. As I grow, uh…, more mature, I can see that the risk I took so effortlessly was far more than I needed to shoulder. This was because I never thought about having a plan – I just jumped from the cliff and figured I’d know how to build my wings at some point before I hit the ground. Luckily for me, those wings somehow were constructed and the sudden stop at the bottom of my flight was avoided.
Managing risk takes a four letter word.
As a career entrepreneur, I now understand the concept of risk from a more calculated perspective. Risk is unavoidable in business. However, it can be mitigated to great extent by making decisions in a methodical way. However, I meet few entrepreneurs that really understand the dynamic between risk and reward. I know they understand it intellectually, but often their decisions defy this understanding. For example, when it comes to marketing, many people engage in circular logic: “I don’t want to invest in marketing because it might not produce a return on my investment. Therefore I will try a couple things and see if it’s effective.” Typically these activities are tactical in nature (build a simple web site, make a brochure, etc.) with the goal of decreasing cost rather than achieving a return.
Unfortunately, this approach actually increases risk, practically ensuring that the initiatives won’t deliver the desired rewards. Thus, the logic dictates that investments in marketing are risky and the cycle continues. For some reason, small business believes that marketing should be an iron clad, guaranteed investment. “We invest Y and we get Z”. However, nothing else in business works this way – there is always an element of risk that things might not go as planned.
The good news is that it is possible to manage risk when it comes to marketing. The four letter word is “plan”. Before jumping off the cliff, create a blueprint for your wings, understand the dynamics of lift, gravity, specific weather conditions, the optimum construction and design of the wings, the energy needed to spread them. Sure, there may be some unexpected events as you make your decent but these risks can also be predicted. There is still risk, but now you are much more likely to soar because you were as prepared as possible.
Now, just don’t get too close to the sun.