Starting A Business Too Much Of A Gamble?
Many people think that investing in the stock market or starting a business is too much of a gamble. Actually gambling is too much of a gamble, but with proper strategies, investing or starting a business doesn’t have to be a significant gamble. Of course, most new businesses fail… So this post is going to give you some suggestions for making your new business less of a gamble.
1. Play the right game
While casino games are losing propositions for everyone in the long run, some games give you more of a fighting chance. In the casino, the closest game to even odds is blackjack, and you can turn the odds in your favor by counting cards. While not illegal, being a good counter will get you banned.
Most poker games pit you against other gamblers, so the smartest player, as well as the luckiest, will often walk away with extra money. It should be noted, though, that the house takes a bit from each pot. No matter what, in each game played, the house is the biggest winner.
In business, you play the right game by finding growing, profitable markets with customers willing to spend money. From there, you study your customer and learn what makes them tick. Rather than trying to fool them into parting with their money, we find out what they truly need and provide it for them. Without good up-front marketing, you are really taking your chances. However, you can opt for the following strategy instead:
2. Know how much you can lose and walk away after it is gone
When I go to the casino, which is almost never as they mainly take my money, I have a stop loss of about $100. So nine times out of ten, I will walk away $100 poorer. The one time out of ten I might walk away with a $500 win. I figure the casino is entertainment, so winning is a very good night. Note that a $100 loss is not that big of a deal when I might go to the casino twice per year.
In business, we might do the same thing. We take $5000 and sink it into a new business and once it’s gone, we move on to the next business. It is possible to see some promise along the way and choose to invest more, or find others to invest in your idea; but you must really see an opportunity before you do that. Consider the investment an education in what not to do.
3. Use a methodology
When I play blackjack, I play the same way given the same circumstances. I might increase or decrease my bet, but my plays are always the same. I might win a hand, might lose a hand, but I always play the same way.
In business or investing, you create a methodology based on many factors. A methodology in business might be to create business processes that do the same thing in the same circumstances for all customers. For instance, you might create an unconditional money-back guarantee and provide exceptional customer service hoping to get word-of-mouth advertising from your customer base. Maybe each customer will not spread the word, but some will.
When selecting a product or a stock to invest in, you might use methodologies that give you a “yes” or “no” about whether or not to go a certain direction. Your formulas would be based on sound judgement, but you might not always pick the right product or investment.
4. You will eventually win
When I play blackjack, I might not win tonight. However, if I play often enough, I will eventually have a winning night. Even though this is true, my overall net will be a loss. This applies to all kinds of gambling including the lottery, blackjack, slots, roulette, etc. Overall, you always lose. You could have a positive net with poker if you are good enough… and perhaps that is what we should consider a business win… when you are good enough to mostly win.
In business, one win is typically all you really need. You can have 2000 failed business, yes, but if you keep trying and keep learning, you will eventually have a success. Again, one is all you really need.
It is tough to try and fail over and over, but in order to succeed we must also fail. Not trying to be in business because you could fail is a horrible reason not to try, because one success is all you typically need.
So what do you think, is it worth the gamble?
Originally published 6/13/2011 on businessfizz.com