Reduce Risk During Rough Times

Reduce Risk During Rough Times

Humans have an innate tendency to take more risks when we are under pressure. Put what’s left on a horse race, kick a ball from far away, that sort of thing. We all love the dramatic stories of when it works out against all odds. But against all odds says it all.

Running a business is not just trying to do 132 seperate things with a deadline, on top of that, most people do it without being able to share stories of the stress wth anyone else. Sure you can discuss important things with employees, and well we should, but they didn’t sign up for your level of responsibility, and you have to keep up at least the appearance of stability. Same goes for long suffering partners at home.

This blog is not a plug for having someone like me as a sounding board, although that’s helpful for a lot of people. I’m thinking more about pushing luck too far in one direction to try to make up for something else that’s not going as well as it you thought it would.

We all have heard that when you find yourself in a hole, first stop digging. That’s excellent advise, but I’m talking about something else as well. Risky attempts to fix it.

Have you ever seen a retail shop, one that’s obviously struggling, try to radically change what they do? Add a cafe, or a barber shop? Might work. Usually doesn’t. That’s mainly because they are seperate investment decisions, effectively a new business, and we all know about the high rate of small business failures in the early days.

For all the modern talk of “pivoting”, maybe that’s best done by businesses that aren’t struggling, in particular with high fixed costs. Usually it’s better to focus harder on your core business, keep margins up and costs down. or even walk away if you have to.

I’m not saying don’t make changes, you have to take action. I’m saying take careful, deliberate, known to work, low-risk changes

I had a surf coach once who said, “if you’re caught in the impact zone, it’s usually better to come in, walk up the beach and take the rip out”. He also said “always spend at least 15 minutes watching from the beach before you head out”.

Our fathers all said “measure twice, cut once”.



Photo by Elijah O’Donell on Unsplash