"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.