“If things seem under control, you are just not going fast enough.” – [Mario Andretti]
Most successful businesses become so by taking chances, but which chances are worth taking and which ones should not be avoided at all costs?
Fair to say the last few years have been pretty rough for some businesses, and you hear people out there saying the opportunities to kick goals in business are nothing like what they used to be. I disagree. I am still seeing businesses taking calculated risks and kicking serious butt, 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] give you a better understanding of the venture and to develop a strategy for success. Use P&L and cash flow projections to better understand all the various possible financial outcomes. Use break-even analysis to show what revenue levels are needed to at least cover costs.
the really tough question: ‘what’s my exit strategy?’.
So what about if it all starts to go pear shaped? Throwing more $$$’s at it in the hope it will come good can potentially be just throwing more good money away. Remember, Arnie Schwarzenegger would always go in with guns blazing, but he always knew where the exit sign was… just in case.