We all know cases where a CEO or founder of a startup has made decisions that could have ruined everything they had achieved up to that point, or at least jeopardized the viability of a great idea. And the question, ultimately, is: Where do we draw the line that marks the limit?
We see how the number of people starting their own business is growing in Spain . First as self-employed, with small companies or taking over from a medium-sized family business. And what will lead them to succeed and grow or remain in a constant race to survive will be the ability to take risks and take advantage of opportunities even if the future is not entirely clear.
Einstein said: “If an idea doesn’t seem absurd at first, then it’s not worth pursuing.” The best opportunities are always the ones that no one has taken yet, and of course, that’s precisely why they don’t inspire much confidence…
Simplicity
The formula for making the decision is actually quite simple . We have three factors or variables: risk, reward and failure. In reality, when we talk about failure, we are referring to drawing or trying to imagine the worst scenario that could occur. And the key when writing the formula is to correctly assign each of these variables the appropriate weight or coefficient that corresponds to it.
Thus, when we consider a new idea to implement, or a business opportunity that is offered to us, we must evaluate the potential of the “reward” or success that this new strategy australia email list 7.6 millions contact leads or business can bring us. We must try to be realistic by trying to assign real numbers adapted to the market we have before us, taking inspiration from products or customer profiles that are similar or related.
On the other hand, it will be especially useful to try to establish the ultimate scenario or the most negative possible case that could occur once the option we are analyzing has been initiated. Again, it is important to do the numbers and add up costs , investment, etc.
If the company or business is not new and is already profitable, it is a good idea to quantify both reward and failure in units related to current profits, such as monthly or annual profits . For example, when evaluating the risk of creating a new service offering, the worst-case scenario after one year might be quantified as having lost six months of profits. In the case of reward, or success, it is more common to project this as a multiple of current profits.
Risk
With this approach, an entrepreneur may consider an idea to be a successful gamble if he evaluates the reward as multiplying his annual profits by 5, while the worst possible scenario would compromise only half of the profits for a year. Logically, the more the two values are equal, the less interesting the gamble is. And if the risk exceeds the reward, it is clear that we were not heading in the right direction.
We are talking about freelancers and small businesses, or the beginnings of a startup. At this level, flexibility coexists with intuition and it is much more agile and quick to make these types of decisions in time. In large corporations, everything flows much more slowly, and decisions are based on reports and very elaborate and contrasted cash-back curves.
When you start a business , it pays to hunt for opportunities, take risks and set the right and necessary limits. Think boldly, take your risks and keep it simple .
