“The difference between a calculated risk and rolling the dice can be expressed in one word: homework.”
– Georgette Mosbacher
The most successful businesses become so by taking chances, but which chances are worth taking and which ones should not be touched with a barge pole?
Fair to say all the various types of unrest in the world currently have knocked business confidence around and there’s a lot of talk about the opportunities out there to kick goals being nothing like they used to be. Maybe. I am still seeing businesses taking calculated risks and kicking goals, but there are some key principles to follow before pinning your ears back and going for it:
maintain a clear vision for the project
Getting too emotionally involved in a business idea can lead to clouded vision and losing an objective view. The greater the risk, the greater level of scrutiny and risk assessment required. Consider a third-party expert for an objective and thorough risk assessment.
ask the questions – do the sums
You have the vision, but what about the strategy? Tools such as SWOT analysis, (Strengths, Weaknesses, Opportunities and Threats) allow you to better understand your potential venture and develop a strategy for its success. Profit & loss and cash flow projections will help you better understand the possible financial outcomes of the venture. Break-even analysis will show how much you must turn over to at least cover costs.
the really tough question: ‘What’s my exit strategy?’
Ok, so if it all goes to seed, what then? Throwing more $$$’s in hopes that it will be better can potentially be just throwing more good money away. Remember, Arnie Schwarzeneger would always go in with guns blazing, but he always knew where the exit sign was…just in case…