When I worked in corporate America, I managed a national sales force. Because the majority of our clients were big brands, we frequently participated in the major industry trade shows many of which were held in Las Vegas.
Now, I’m not a gambler, but my team liked to hit the casinos after a long day on the trade show floor. Wanting to build camaraderie with the team, I’d usually tag a long for a little while. Typically, I’d find a video poker machine where I’d invest $20 that would usually entertain me for a couple of hours. Once the money was gone — so was I.
One evening, one of my team members decided to join me. He watched as I bet the minimum — 25 cents — on each hand. Finally, he said, “You’re getting some good hands. You should really bet the maximum, so if you hit you’ll win big.”
“Nope. I’m happy with my quarter bets,” I explained.
A few hands later I hit a Royal Flush.
“Oh man. You should have been betting the max,” he said.
If you aren’t willing to take big risks in business, you won’t reap the big rewards. If I’d been betting the max, instead of $250, I would have walked away with $2,500.
Of course, betting on video poker is much different than betting on your business. Risk is a part of doing business, but it’s not a game of chance. As a smart business owner, you learn to take calculated risks. Yet many entrepreneurs are paralyzed by the fear of failure. The bigger the risk, the greater the fall, they fear. But should they be afraid?
No one likes to fail, but failure is an opportunity to learn and grow. The key is to fail fast and to move forward with renewed energy. As one of my favorite celebrities, Julie Andrews, said, “Success to me is failing 19 times and succeeding on the 20th try.”
While there’s no need to fear failure, it’s important to remember a couple of things.
1. Do Your Homework.
As I noted gambling is a game of chance, but in business you need to do more than guess. Many entrepreneurs make the mistake of following their gut instinct which by itself isn’t much better than playing a guessing game. Savvy business owners understand that before they gamble on their success, they need to do their homework. Make sure you research every opportunity and analyze the risk and reward potential.
2. Set a limit on your losses.
Just as I noted above, I limited myself to $20 in Las Vegas. If I’d lost that amount, I would have walked away. You need to do the same with your business risk. Determine how much you can financially risk without winding up in the poor house. Never make the mistake of throwing good money after bad. While there’s no hard and fast rule to help you make this assessment, if you do your homework you should be able to have an estimate of a reasonable amount of risk for the return you’ll get on your investment.
Playing it safe — always following the tried and true path — won’t help you build a wildly successful business. So if you’re wondering why your small business is struggling, think about your strategy. Are you playing it safe or are you willing to take a big risk?
What are you doing to move past fear and take calculated risks? Tell us in the comments below!
Susan Wilson Solovic is an award-winning entrepreneur and journalist, author of three best-selling books, multi-media personality and contributor to ABC News and other outlets, public speaker and attorney. AT&T has sponsored this blog post.