Take Small Bets

make small bets

Small bets keep you in the game and allow you to learn.

You can definitely be doing better. Your business could be running better. You could have many more customers. You could find a better job.

But the present situation is comfortable. It feels normal. Attempting something more opportunistic can feel risky. And in reality, it is risky. Things around you are changing rapidly. What was true months ago or even weeks ago are not true today. We work in a highly adaptive economy.

In a sense, it is an efficient market all around. Your advantage is diminished because everyone has access to the same information quickly. You may have discovered something, but so has everyone else. This erodes your advantage quickly. It’s great for consumers and employers, but it can be difficult for everyone else trying to make ideas happen or increase their lot in life.

One of the big mistakes I see business people doing is taking big bets. They have an idea they love, and they bet the farm. If they are wrong, there is a big consequence.

But a goal can be approached in many different ways. With so much uncertainty, competition and adaptation that occurs, you must test your assumptions often and early. This means taking small bets.

If you think you have a world-class product every homeowner should buy, then why not test the assumption with a little bit of money and a few people? See if people really do like it. Study how they react, and then make corrections.

If you think you want to start a business and are tired of having a boss, how about working a few hours on the side building something first and seeing if you can get your first customer. The feedback can help you refine your work and value without jumping off the deep end.

You may have a vision of getting thousands of customers to pay a $20 per month fee for your amazing software. How about using the software in a $2,000 consulting service first. Using consulting to test your product idea can help you see if it has real value, work out the bugs and bring increased clarity on how to launch. Perhaps you even have two lines of business from your learning.

Small bets allow you to stay in the game, and with a well-designed strategy you can overcome the forces that are working against you. A small bet does not wipe you out. It gives you multiple chances to stay in the game.

This means less analysis and more execution. You get an idea, and you get to action as quickly as possible. You put it out there and see if the real world matches with what is in your head.

In the mean time, you are learning, and you can course correct with minimal risks.

I realize it’s hard to think this way when we’ve been taught to take big bets or that perfection matters. But I am guessing that you don’t want to lose it all in one attempt.

We don’t live in the old days where perfection may have mattered more. There are plenty of perfect products that failed. There is no shortage of great ideas that missed completely.

That’s the hard part. Reality ultimately judges us, and taking small bets allows us to find out if we are right with the least amount of risk.

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