It truly is a jungle out there. Regardless of your good intentions, there is much uncertainty and unknowns in the course of building businesses.
I know many entrepreneurs that strictly focus on the top line and driving revenue. Sometimes, this intense focus precludes worrying about the details that might chip away at one’s winnings. It’s like being too busy rowing a boat faster than taking the time to plug a leak that could sink you in your efforts.
I love rowing fast and hard. But, I also know the cost of not protecting your downside. A downside event can equal multiples of any hard earned upside you can create.
Here are some low-hanging ways to be effective as an entrepreneur in protecting your downside:
Create good agreements. The agreements you have with vendors, customers, employees and partners need to be written down clearly and have legal language to limit your liability and clearly define the boundaries of your relationship. Get these updated regularly. Think about who you have existing agreements with and ensure you have clear language, expectations and legal protection.
Have detailed people executing your vision. Entrepreneurs tend to be big picture, strategic and fast moving. If you struggle with details, follow-through and execution, do not try to become better. It’s a fool’s pursuit. You likely simply suck at execution. Be smart. Save your time and energy. Get an administrative assistant and have them looking out for what needs to get done. They will likely spot any gaps in your business that you could not detect. They can focus on the micro while you are freed up to focus on the macro.
Do business with good people. If you have a gnawing sense that a person’s integrity is not whole, then avoid deals with such bad people. Agreements, process or vision will not help you. Good business works with good people. You can usually listen to stories where a person does right when there is pressure to figure out if you are dealing with a heroic, rather than a selfish, lazy or cowardly person. Be patient and only do business with good people. This is long-term insurance that pays continual dividends.
Get smarter. You can live in the moment by your feelings or you can learn from your experiences and others’ wisdom to develop a way to operate in the world. Build principles that you reinforce and live by so your decision making is disciplined. If you write down and live by, “I work with good people only,” then you are not prone to the pain of exceptions and downside risk of doing otherwise. Don’t repeat dumb mistakes. Make solid rules that serve you well.
If you protect your downside, the upside takes care of itself. You will have plenty of opportunity. That is less a problem than the one cataclysmic event that can simply take down all your winnings and work.
What next area could you drive downside risk protection within?