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  #1  
Old June 16, 2001, 03:35 AM
Michael Ross
 
Posts: n/a
Default Before moving forward you had better

learn how to control reverse.

She reached her hand to mine, openned it and dropped the change. And so the transaction was conducted. She had my money and now I waited for my burger and chips.

And while tucking the change away I glanced out the shop window.

And old guy went zooming past. He was on one of those motorized, three-wheel and a basket on front, thingies they get around on these days.

Problem was, he was going backwards. So fast. I didn't think those things could go that fast forward let alone back.

And as he zoomed past he turned the wheel and headed for the road. Just before he got to the road he turned it again - too late!

The back wheel fell of the gutter and he and his motor-thingy feel over onto the road.

I just looked. What on earth had just happened?

He had been sitting quietly on the sidewalk when I walked into the fish and chip shop. Did he have a stroke? Heart attack? Something else?

I reached down for my mobile phone to call the ambulance. He started to move, a woman rushed to his aid, then the two people who had been waiting at the bus-stop. A council guy on a council bike pulled up. A guy in a soft top jeep pulled up. Another woman came and supervised. And the counter-girl from the chemist came out with some disinfectant and bandages to take care of the cut to his knee.

I watched as these strangers worked as a team to help this old one-legged man who had just crashed onto the road in his motor-thingy with the BMW sticker on the front.

And when he was back in the driver's seat, cut taken car of and appeared to have his full senses back, the helper's all went back about their business as if nothing had happened.

It was wonderful to see. To see how total strangers will work together to help someone.

And it got me thinking.

Business is not like this at all.

When you go backwards in business until you crash, there is no one who comes to your rescue. In fact, the opposite happens. People come to take your stuff away while your laying in a crumpled heap.

If that old guy had first learnt how to control reverse he would never have crashed. If he'd first learnt to stop going backwards he would never have crashed.

And that, it seems to me, is a good business lesson to learn. Handle reverse - either to control it or stop it all together - and you won't crash.

Have a back-up. Cover your downsides. Create a plan B.

Whatever. Doing it would prevent the "grabbers" from taking your stuff when you crash cause you wouldn't crash.
  #2  
Old June 17, 2001, 07:16 PM
Dien Rice
 
Posts: n/a
Default How to create a business with zero risk....

Thanks Michael, good story and really good wisdom.... :)

> And that, it seems to me, is a good business
> lesson to learn. Handle reverse - either to
> control it or stop it all together - and you
> won't crash.

> Have a back-up. Cover your downsides. Create
> a plan B.

> Whatever. Doing it would prevent the
> "grabbers" from taking your stuff
> when you crash cause you wouldn't crash.

I agree, Michael....

As you know, I've been studying "serial entrepreneurs" -- those who have started multiple businesses with "high" success rates. And I've noticed there are things in common between them all....

One thing which comes up over and over is that multiply-successful entrepreneurs limit their risk.

It's good to think positively -- otherwise you might not do anything at all. But the other side of that -- which isn't talked about very much -- is to think about what you'll do if it doesn't work. And I've noticed that repeatedly successful entrepreneurs do this....

One way is to have a Plan B, a backup plan, of another way you can profit if the first way doesn't work. And there are other strategies too.... For example, the idea of "testing" in mail order is another way of reducing risk, in a specific kind of business.

Another way is the approach used by Bob Reiss, which he explains in his book "Low Risk High Reward." He created a game based on TV Guide.... So by cooperating with a "big name" like TV Guide, he was able to reduce his risk. He also had an even better way....

Instead of paying his suppliers in cash, he made profit-sharing agreements with them, so they got a part of the profit.

This might sound like he was giving away his profits, since it's true, if the game was successful, then he would end up making less money. That's because he had to share the profits with his suppliers as well as with TV Guide (which also agreed to promote the game, also for a share of the profits).... BUT --

On the other hand, think of what happened if the game DIDN'T sell. Well, in this case, Bob Reiss had practically lost nothing! Since his suppliers were taking a share of the profit instead of cash up front, it also meant they were taking a share of the risk. In the end, he had "farmed out" the risk to others, so the financial risk to himself was practically zero.

He says in his book that most entrepreneurs are over-optimistic about their chances of success.... It's good to look at the "down-side" and actively look how you can limit your financial risk, through one scheme or another, just in case. Most don't even think about this, which is why some people start businesses then end up losing everything. It does happen -- but it doesn't have to.

Thanks Michael, excellent post! :)

- Dien
  #3  
Old June 17, 2001, 09:28 PM
Jesse Horowitz
 
Posts: n/a
Default When To Forget About Positive Thinking...

Great addendum, Dien, to what was a very insightful post by Michael. It begs the issue of a fascinating paradox that we must grapple with as entrepreneurs. Consider the following:

Without a positive, forward-thinking attitude, optimism, persistence, and much resolve, an entrepreneur is highly unlikely to achieve long-term success...

...Yet as Dien insightfully points out, misplaced optimism on a 'per-project basis' can be very dangerous, and can prevent us from meeting our objectives.

I see too many entrepreneurs so intoxicated by the excitement of a new project, that they somehow rationalize projections which are completely unrealistic.

Does this sound familiar?

"If I 'only' get a 5% response, I'll make $57,324 on this project with hardly any work! There's just *no way* I won't get 5% with a list this targeted and an offer this good!"

Why set yourself up for a deflating crash and burn? Instead, figure out how to make a profit at 1%, or better yet 1/2% or 1/4%. I like to always cut my projections in half, and then half again. And if I STILL come out ahead, then I can be reasonably certain that I have a winner.

As Dan Kennedy said, "Why not play the games where the question isn't whether you'll win, but by how much?"

So there you have it. Strike the optimal balance of visionary, big-picture optimism, with 'micro-pessimism', and you'll be on your way to smashing entrepreneurial successes!

Thanks again, Michael and Dien, for your insights. I'd be happy to explore this topic further with anyone else who has an anecdote or opinion!

Best regards,

Jesse Horowitz

> Thanks Michael, good story and really good
> wisdom.... :)

> I agree, Michael....

> As you know, I've been studying "serial
> entrepreneurs" -- those who have
> started multiple businesses with
> "high" success rates. And I've
> noticed there are things in common between
> them all....

> One thing which comes up over and over is
> that multiply-successful entrepreneurs
> limit their risk .

> It's good to think positively -- otherwise
> you might not do anything at all. But the
> other side of that -- which isn't talked
> about very much -- is to think about what
> you'll do if it doesn't work. And I've
> noticed that repeatedly successful
> entrepreneurs do this....

> One way is to have a Plan B, a backup plan,
> of another way you can profit if the first
> way doesn't work. And there are other
> strategies too.... For example, the idea of
> "testing" in mail order is another
> way of reducing risk, in a specific kind of
> business.

> Another way is the approach used by Bob
> Reiss, which he explains in his book
> "Low Risk High Reward." He created
> a game based on TV Guide.... So by
> cooperating with a "big name" like
> TV Guide, he was able to reduce his risk. He
> also had an even better way....

> Instead of paying his suppliers in cash, he
> made profit-sharing agreements with them, so
> they got a part of the profit.

> This might sound like he was giving away his
> profits, since it's true, if the game was
> successful, then he would end up making less
> money. That's because he had to share the
> profits with his suppliers as well as with
> TV Guide (which also agreed to promote the
> game, also for a share of the profits)....
> BUT --

> On the other hand, think of what happened if
> the game DIDN'T sell. Well, in this case,
> Bob Reiss had practically lost nothing!
> Since his suppliers were taking a share of
> the profit instead of cash up front, it also
> meant they were taking a share of the risk.
> In the end, he had "farmed out"
> the risk to others, so the financial risk to
> himself was practically zero.

> He says in his book that most entrepreneurs
> are over-optimistic about their chances of
> success.... It's good to look at the
> "down-side" and actively look how
> you can limit your financial risk, through
> one scheme or another, just in case. Most
> don't even think about this, which is why
> some people start businesses then end up
> losing everything. It does happen -- but it
> doesn't have to.

> Thanks Michael, excellent post! :)

> - Dien
  #4  
Old June 18, 2001, 01:32 PM
Dien Rice
 
Posts: n/a
Default Wringing success from every venture....

Hi Jesse,

> Without a positive, forward-thinking
> attitude, optimism, persistence, and much
> resolve, an entrepreneur is highly unlikely
> to achieve long-term success...

> ...Yet as Dien insightfully points out,
> misplaced optimism on a 'per-project basis'
> can be very dangerous, and can prevent us
> from meeting our objectives.

Yes, many of the largely successful entrepreneurs I've read in detail about look at the "downside" of things as well as the "upside".... Yet (for some reason) MOST books don't touch on this side, they DON'T tell you much (if anything) about how to take care of the "downside"....

As Donald Trump has said, "Protect the downside, and the upside will take care of itself" !

It's sensible.... If your downside is limited (or even nonexistent), you can afford to fail and then come back with something else which may work....

> I see too many entrepreneurs so intoxicated
> by the excitement of a new project, that
> they somehow rationalize projections which
> are completely unrealistic.

> Does this sound familiar?

> "If I 'only' get a 5% response, I'll
> make $57,324 on this project with hardly any
> work! There's just *no way* I won't get 5%
> with a list this targeted and an offer this
> good!"

Yes! I've thought that way myself in the past.... :)

> Why set yourself up for a deflating crash
> and burn? Instead, figure out how to make a
> profit at 1%, or better yet 1/2% or 1/4%. I
> like to always cut my projections in half,
> and then half again. And if I STILL come out
> ahead, then I can be reasonably certain that
> I have a winner.

That's a great approach!

I like to do what Michael said -- think of backup plans. I've found that some projects lend themselves easily to backup plans, and others don't. Then, I go with the projects where I can have several "fallback" options to make money, so I have multiple ways of making money from the project....

That way, even if I don't make money one way, I'll make it another way.... :)

> As Dan Kennedy said, "Why not play the
> games where the question isn't whether
> you'll win, but by how much?"

Yes, great quote! Thanks! :)

> So there you have it. Strike the optimal
> balance of visionary, big-picture optimism,
> with 'micro-pessimism', and you'll be on
> your way to smashing entrepreneurial
> successes!

> Thanks again, Michael and Dien, for your
> insights. I'd be happy to explore this topic
> further with anyone else who has an anecdote
> or opinion!

Thanks Jesse, you have some great insights! :)

One thing I'm interested in is, does anyone know of other ways of reducing your risk (or eliminating it entirely), in addition to what's already been mentioned? Or even some examples would be good.... This is a topic I'm actively researching right now, and it's clearly VERY IMPORTANT if you want to be a success! YET, there's very little written about how this works in small business, as far as I can tell -- MOST books don't seem to cover this at all!

Thanks Jesse and Michael.... I've really enjoyed both of your insights! :)

- Dien
 


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