There is something interesting on my mind that I would share with you guys in this blog post because a lot of people perceive entrepreneurs as individuals who take a lot of risks, bet on everything, and take crazy amounts of risk, most of the time goes as far as putting everything they have on the line just to start a business or pursue whatever their dreams may be. To a certain level of degree, I will admit that most often that's actually true but that perspective is mainly for beginners entrepreneur but as for experienced entrepreneurs like myself we do not like risk. One major lesson have learned over the Decades of being in business as a successful businessman is not about being smart but it's about doing less dumb things.
Learning About Key Moves
Think about it for a second, for a successful career in the world right now, you will notice that most of it successful entrepreneurs make a couple of key moves a few times in their journey as an entrepreneur. They never do a lot of things like 100 times perfectly or we're executed perfectly in their journey, but rather few key moves. It brings me back to this quote for Bruce Lee which I will paraphrase and it says "I'm not scared of someone who has perfected 1,000 kicks, but I'm scared of someone who has perfected one single kick and as practiced it a 1,000 times".
Defining moment
Once it comes to about making key decisions, how to get into a certain field in a particular industry, launching a new product or meeting certain people, it all comes down to those key moments, those defining moments that shape the entire career. What actually doesn't work for most people is the fact that they make a lot of dumb mistakes. The problem here is when an entrepreneur makes a dumb mistake it's bounce back time it puts them at a disadvantage of time.
It's not just about making a mistake is all about how much it takes from an individual to learn from the mistake, realize the mistake and bounce back. Getting Over the mistake that makes it costly. Let's take for example, you started a company and you went bankrupt, it can take years to get back to that certain level that you were before or will I say back to normal and as a result, it will take a lot of your time. So is all about doing less dumb things and making a couple of key moves that will bring good results.
Risk and reward
As an entrepreneur when it comes to making key moves you have to consider the risk and the reward system, from what I've noticed over the period of time is a lot of entrepreneurs even non-entrepreneurs get into trouble because of one thing and that is Greed! Yes, they get very greedy and as a result, they risk something that they have pursued and gain for something they don't need.
There was a story of a friend of mine who was a very successful entrepreneur and successful in the business space so he decided to go into the stock market and overleverage his capital then margin calls and lost everything he had, which resulted in him losing millions of dollars and affected his business, not only was he successful but because he was greedy. He wanted more and bet all his fortune on the stock market and as a result, lost millions and also his business as well, which is what I consider as sad news.
Understanding the risk to reward ratio as an entrepreneur is a key element for every individual even not only an entrepreneur. You must always calculate your risk in whatever you do. For me personally, I do not like to take risks, all I do is, think about how much money I'm going to make from a business and how much money I can possibly lose from that particular business. When I think about this aspect and I'm planning on making a financial decision I always calculate my risk and the rewards.
Questions to ask yourself as an entrepreneur
I want you to make a rule when it comes to you making business decisions as well as money decisions. To understand the risk and reward ratio anytime you are faced with a situation I want you to ask yourself this question:
- How much money can I potentially lose? Not actually how much money you can actually make but how much money I can actually lose.
- What is the downside? You have to look at the disadvantages associated with your decision. Let's see if everything didn't go as planned, what are the Likely consequences you will face?
- And lastly, can I live with the consequences? Can I leave with this Downside? Can I live with this loss
Like the story I gave earlier of an entrepreneur who loses his business and wants you into debt. If he had asked himself these three questions I mentioned above he would have realized that he could potentially lose his business, and run into millions of debt and he wouldn't have taken such a risk. He would have taken a calculated risk instead and would have come to the conclusion that he risking his company and it is not a very smart move.
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