Start and Grow a Low Risk Business

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I heard from a friend that their big corporation just laid off hundreds of people. It could be from mismanagement, market downturns or simply another industrial age company ending their cash cow ride.

It’s easy to lose sight of the bigger picture. If people don’t want what you offer, then your business is going to simply go away. Businesses exist to meet demand. No demand, no business.

But, new businesses can also emerge simply from new demand. That’s great news for entrepreneurs that can notice what people want. And, for those that already have a security blanket – a job or a business – it’s easier than ever to start a new business with low risk.

There’s no such thing as no risk. You can only lower it in the face of competition, uncertainty, complexity and market dynamics. And it’s critical to manage risk when it comes to new ideas and ventures.

I’ve written a lot about managing downside and pursuing opportunity. You can check out my resource on productizing for creating options for yourself.

If you feel secure, then it can be a time to put energy into new opportunities for hedging your cash flow in case your gravy train runs out.

If you have had success and sold a business or had a payday, then you can open up a new game for yourself to see what opportunities might emerge.

If you don’t know what to do, there is nothing like action to help you get more clarity.

Being a sitting duck and waiting for something to happen can be a painful jolt when the shoe does finally fall.

While there are businesses that are shuttering up, the great news is there is a ridiculous amount of opportunity out there as well for those that are proactive, smart and eager.

How could your cash flow disappear? What’s holding you back from creating new business options?

Build In the Cost

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Part of living in reality is accepting all its shortcomings and inefficiencies. All the inputs you may work hard to put into a system – materials, technology, talent, management, etc. – will not work at maximum efficiency or ever be balanced.

When your systems become more complex, there is going to be more leakage and failure points. And a good system designer will account for the cost that comes from trying to make a workflow or system work.

That cost plus comes from the dependencies and statistical fluctuations which are a natural part of life.

People get sick. A vendor doesn’t deliver goods you need on time. A strategy missed the mark. You get a software virus.

Every working day has these types of statistical fluctuations and it has an impact on how your business and workflow will operate.

It’s why accounting for the costs that are natural from everyday work as well as Old Man Murphy is so important to consider. You have to have margin that’s based on the inevitable inefficiencies which will impact your results.

I think it makes operational efficiency somewhat of an art as well. You don’t know what will impact your well-intended and well-laid plans. You can only know that there are places in your workflow that will take a hit, sometimes sporadically, and other times regularly.

When it comes to getting business results, the cost side of your systems are real and if your expectations can have a buffer to what is ideal, you can rely on a lot of flex in your outputs. This is especially true with people-dependent processes and systems.

I like to think about contingency planning along with continuous improvement in known areas that will require support at untimely intervals. This not only keeps you from being blindsided, but you manage the risk from an imperfect world we all have to tolerate.

Consider where your costs will arise and how it impacts your overall results, whether that is in selling, demand generation or operational workflow. Mitigating that cost can go a long way towards allowing for continuity and sanity.

A Year’s Worth of Living

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I got to see an unbelievable human being last night with my family, Alex Honnold. If you have not gotten to see some of his work climbing daunting mountain faces, including being the only person to free solo climb Yosemite’s El Capitan simply with his shoes and a chalk bag, be sure to catch his incredible feat on Youtube:

One of the reasons I love living in the mountains is the accessibility of the outdoors and spirit of mountain people. We are always doing something fun and always living with adventure.

Honnold shared his recent trips out to Kenya and climbing Mt. Poi in the North Face Speaker Series. We saw him vomiting climbing Mt. Kenya at over 17,000 feet with his friends. And he had that wonderful perspective,

You get to have a year’s worth of living in two or three weeks.

He had that intentionality and freedom which gets all of us onlookers and fans dreaming bigger. So inspiring and true to hear how he has lived his life and pushed himself.

I’m not sure any of us can get away with excuses on being stuck in the doldrums of life, not when there are people like Alex Honnold out there exploring, pushing and challenging themselves.

Playing it safe, checking off time until we die, doing the known things – these can all be comfortable. Yet there’s a crazy, alluring and adventurous life out there waiting to be opened if we simply make choices to get out of our comfort zones.

With 8 billion people on this giant earth, I’m glad we have those that push the limits and help us dream. Total respect and kudos to a young man that has done unthinkable things and lives fully. It’s got me stoked for sure.

Everything is an Experiment

 

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Here’s the simple strategy for keeping you from getting washed away in the tides of innovation all around you:

  1. Observe what’s happening around you in your world and see what people are buying.
  2. Come up with 3 ideas that get people to buy.
  3. Build a solution and sell it to one customer.
  4. Observe their reactions carefully.
  5. Iterate and tweak the customer experience with your offering.
  6. Keep experimenting with new ideas and repeat.

If you are a person that needs the sure thing, go into working for the government or accounting. The marketplace is not the place for you.

With the ease of creating what we want, connecting with the world and trying out our ideas, your ideas will obsolesce at a rapid rate.

But, it’s an exciting and low risk time for entrepreneurs. The tools are there. We just need to see your ideas play out and you have to be committed to the process of idea generation and experimentation.

Some of those ideas will materialize into enterprise plays and exit strategies. Very few will, however.

Most of the ideas you experiment with may materialize into microbusinesses that cash flow and build an audience. From there, you can segue your offering by experimenting further and watching your tribe carefully to meet more desires.

The strategy is not hard to implement. Having the vision and focus to see your ideas through is the hard part. That’s the catch with innovation and uncertainty. While everyone else is waiting for something to happen, you can get the lion’s share reward by making something happen. Then invite those along that are waiting to be part of it.

What idea can you experiment with today? How can you put forth a low risk approach and see what people do with your idea?

Innovate and Leave the Industrial Age Behind

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We are in a major election cycle and the promise of jobs keeps coming up as if the candidates can magically create jobs and fill out the shrinking middle class by decree.

Ever take a look at the recent 10 Worst Companies to Work For article? Why do people hang on and work for these outdated industrial age businesses? They are either confused and stuck back in the dark ages when they could decree what the masses should buy because they had massive production or they are retailers that continually lose their way in this confusing world of infinite options.

Yet, people still work at these places holding onto some hope that will only decline over time.

Want to know what a middle class life was before? It is a white-collar person that relied on information inefficiency. Some manager of HR or marketing or finance. If there’s complexity and inefficient information flow, then they are needed. In fact, the more complicated and slow, the more they could snow the bosses and hold onto their precious positions. Multiply that by millions and you have neighborhoods sprawled across urban centers with strip malls propping up someone whose job relies on ambiguity, politics and layers.

The industrial age, when we made things cheap, efficiently and en masse, allowed us to get fat and have everyone work for static, aligned companies.

Now, information and connection flows freely. You can build your own company without any fat to it. You can access powerful databases for a few dollars a month or for free. The only thing limiting someone from launching is:

  1. Guts
  2. Clarity

That’s the scarcity. Rather than waiting for someone to want you, you can kick the crappy jobs to the curb and get in the game of entrepreneurship for no money or very little. You have to innovate and move from an industrial age, outdated mode, where someone is telling you what to do to a place where the real game is being played. Build something people want. Connect directly with customers and people that can help you help customers. Make it happen repeatedly with excellence.

Do you think jobs are coming back? Why?

How Are You Playing?

There was a class of MBA students that was once asked by their professor, “What is risk?” The answers that came back were conventional:

“To start a business,” and “To become an entrepreneur,” and “To invest in the stock market.”

The professor let the class name several and then he named it, “To have only one source of income. This is what you have when you are an employee. When you own a business, you have multiple streams of income by the number of customers you have. If you lose one, it does not proportionately affect your income as being an employee.”

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