22 - Strategy

							22. Strategy


    Risk	
  is	
  an	
  integral	
  part	
  of	
  every	
  business,	
  and	
  needs	
  
    to	
  be	
  constantly	
  evaluated	
  and	
  mi8gated.	
  Strategy	
  is	
  
    all	
  about	
  making	
  the	
  right	
  decisions,	
  and	
  protec8ng	
  
    yourself	
  from	
  too	
  much	
  downside	
  risk.	
  


    Deciding	
  which	
  risks	
  to	
  take,	
  and	
  which	
  ones	
  to	
  
    avoid	
  can	
  be	
  tricky.	
  How	
  do	
  you	
  make	
  choices	
  
    without	
  jeopardizing	
  your	
  business?	
  	
  


    In	
  this	
  chapter	
  I’m	
  going	
  to	
  explore	
  how	
  to	
  protect	
  
    yourself	
  from	
  a	
  unnecessary	
  risk,	
  while	
  employing	
  
    decision-­‐making	
  strategies	
  to	
  help	
  you	
  make	
  the	
  
    best	
  choices	
  for	
  your	
  business.


    Learn	
  how	
  to	
  
    take	
  the	
  
    chances	
  that	
  
    will	
  get	
  you	
  
    ahead,	
  not	
  leave	
  
    you	
  in	
  the	
  dust.
Make the Right Business Decisions

  I	
  have	
  this	
  Decision	
  Making	
  Matrix	
  up	
  in	
  my	
  office,	
  because	
  these	
  four	
  
  factors	
  help	
  me	
  make	
  choices	
  for	
  my	
  business	
  every	
  day.	
  The	
  key	
  is	
  to	
  
  balance	
  these	
  four	
  factors,	
  make	
  sure	
  there’s	
  enough	
  of	
  each	
  of	
  them	
  in	
  
  your	
  strategy.	
  To	
  read	
  more	
  about	
  the	
  four	
  factors	
  check	
  out	
  this	
  eBook.




         Potential Upside                                      Likelihood of Success




                                                                                                                     Chapter 23: Strategy
        Does this initiative have                                 To balance out the
        clear, meaningful                                         potential upside,
        potential for growth?                                     evaluate your chances of
        It’s very important to                                    actually succeeding. If
        weigh this factor                                         they’re low, it’s probably
        against the other three.                                  not worth doing.




             Effort Involved                                       Strategic Value

         How much effort will it                                  How does this decision
         take? Even if the potential                              help you reach your
         upside is big, if it takes a                             ultimate goal in your
         year before you know                                     business? If it doesn’t
         whether it succeeds, it                                  contribute directly to your
         might not be worth it.                                   overall plan, be cautious.
Protect Your Downside Risk

  A	
  lot	
  of	
  being	
  successful	
  in	
  businesses	
  is	
  just	
  about	
  being	
  able	
  to	
  stay	
  
  in	
  the	
  game	
  and	
  see	
  things	
  through.	
  To	
  survive	
  the	
  storm,	
  you	
  need	
  
  to	
  protect	
  your	
  downside	
  risk.


  I’m	
  willing	
  to	
  take	
  on	
  a	
  lot	
  of	
  risk,	
  as	
  any	
  business	
  owner	
  is.	
  Just	
  look	
  
  at	
  the	
  message	
  of	
  this	
  book;	
  I’m	
  encouraging	
  you	
  to	
  believe	
  	
  in	
  your	
  
  business	
  idea,	
  and	
  take	
  out	
  savings,	
  credit	
  cards,	
  whatever	
  you	
  need	
  
  to	
  in	
  order	
  to	
  start	
  that	
  business.


  I	
  will	
  never	
  encourage	
  people,	
  however,	
  to	
  take	
  a	
  risk	
  that	
  doesn’t	
  




                                                                                                                               Chapter 23: Strategy
  have	
  an	
  accompanying	
  payout.	
  This	
  is	
  an	
  unnecessary	
  risk.	
  	
  


  Don't	
  take	
  risks	
  that	
  have	
  a	
  low	
  likelihood	
  of	
  a	
  major	
  reward	
  or	
  that	
  
  could	
  poten?ally	
  cripple	
  your	
  business	
  if	
  unsuccessful.	
  A	
  lot	
  of	
  this	
  
  has	
  to	
  do	
  with	
  your	
  own	
  resources.	
  Make	
  sure	
  you	
  always	
  have	
  
  enough	
  to	
  get	
  by,	
  and	
  to	
  fight	
  another	
  day.	
  


  Your	
  goal	
  is	
  to	
  take	
  risks	
  that	
  have	
  a	
  poten8al	
  upside,	
  without	
  the	
  
  downside	
  risk	
  being	
  the	
  loss	
  of	
  your	
  business,	
  your	
  mortgage,	
  or	
  your	
  
  ability	
  to	
  cover	
  rent	
  or	
  living.	
  


  Having	
  those	
  concerns	
  weighing	
  on	
  your	
  shoulders	
  will	
  make	
  you	
  a	
  
  worse	
  businessperson	
  in	
  the	
  long	
  run.	
  You	
  may	
  perform	
  well	
  under	
  
  pressure	
  for	
  the	
  first	
  year,	
  but	
  aNer	
  3	
  or	
  5	
  years,	
  you	
  will	
  break	
  under	
  
  the	
  tension	
  and	
  make	
  poorer	
  decisions	
  for	
  it.