Take a Good Risk and Be the Smartest Person in Your Business

by | Oct 10, 2017 | Ice Cream Consulting

risk/ noun

    1. a situation involving exposure to danger.
    2. as defined by Wikipedia: Risk is the potential of gaining or losing something of value.

I frequently mention to clients, if you plan on taking a risk, then make sure to be informed and educated on the subject. It can be the difference in being a long term success or short lived endeavor. In risk taking, I emphasize becoming informed and knowledgeable  on all or most l aspects of the business, otherwise it’s just a fool’s errand with an unhappy ending.

Best of Intentions:

People contact me saying they have an amazing product and plan on being as successful and recognized as Ben & Jerry’s and Stonyfield Farm. Great, good to know. However, if they were able to witness the trial and tribulation that both companies experienced back in the 80’s, they’d have a better understanding of risk taking. I was working in NE at the time, meeting with distributors and buyers, pitching our super premium ice cream in pints and would regularly run into to the owners. They’d walk past with a look of disappointment, probably from being rejected, because the buyer didn’t want to upset the current arrangement in place with Häagen-Dazs. As with Stoneyfield Farms, the buyer probably was concerned that yogurt would not be of interest to the general consumer. So the risk everyone was taking, was betting on visionary and cutting edge products that were trying to be sold to the conventional business audience. Manufacturer’s understand that consumers have a strong interest in Wow products, so even today, the risk is trying to educate and convince a conventional minded audience.

An Example of Career Risk Taking:

A hedge fund manager is educated in finance to be prepared for a career in a risk driven industry. Being informed on the investment product will be key to minimize the risk of loss, so taking a calculated risk. As for the fund manager making an investment by gut feeling and without total information, is taking a higher risk, with a higher probability of failing. The result, a loss of client money and possibility of earning a bad reputation. The same can apply when start-up’s simply pitch on the basis of feeling excited about their business concept.

An Example Start-Up Risk Taking:

You have an strong interest to start an ice cream or other business, with a concept you clearly “feel” can be an overnight, national success. So with that energy, you first approach family, then friends and finally investors, requesting seed money to fuel a spectacular business opportunity. Somewhere in your pitch, you will probably include there’s a minimum risk being taken and to believe in you – total emotionally based. So consider instead to take that initial energy and conduct thorough due diligence on your business, brand or concept, before the pitch. Remember when selling or promoting, you will be the most excited person in the room and may take aback to find a few in the audience may not see your endeavor as such a low risk and why? Because, you come to the table without a proven product or sales track record, a “first of it’s kind” product is of greater risk than simply a modified version of an existing concept, which everyone is familiar with. To minimize risk, be the expert in each aspect of your business.

Moral of the Story:

Understand your business better than anyone else, during its conception through daily operation. If you want to keep your family and friends intact and become a good name in the investment community, then do it right the first time by betting your business on fact, not feeling.

If you want to venture into a business and desire to be a winner with low risk, then contact Darryl. He will work closely with you to minimize the risk of starting a new business. Your friends, family and investors will thank you for be prepared.    

 

Darryl David
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