Small business owners, can you relate to these scenarios?
– It’s time to open a second retail store branch—and you fully intend to—but you’re not quite ready yet. You found a possible location but it doesn’t seem perfect, and besides, you’re not sure if the local marketplace conditions are right. Maybe next year would be better.
– Yesterday, you met the best natural salesperson ever. Instinctively, you know she’d be perfect for your team and she hinted that she might be in the market for a job change. You’d love to hire her, but the time doesn’t seem right to hire a new person—money is tight and you’re far too busy to go through the hiring and training process right now.
These hypothetical owners may think they’re just avoiding unnecessary risk. But if you read the scenarios again—and if you’re honest with yourself—you’ll have to admit their reasons reek of excuse making. And here’s the real problem, says author Tom Panaggio: Risk avoiders are also opportunity missers.
“When you’re in charge of running a company, it’s easy to convince yourself that playing it safe is the responsible choice,” acknowledges Panaggio, author of the new book The Risk Advantage: Embracing the Entrepreneur’s Unexpected Edge.
“Especially if your business is new, going out on a limb is the last thing you want to do. But risk is needed if you want to do more than just scrape by—and it may be needed just to survive in this economy.
“Hoping that sales will get better or that conditions will improve is the wimp’s approach,” he adds. “You can’t wait for everything to be perfect because it never will be. You have to take action—in other words, accept risk and make those things happen.”
Here, Panaggio helps business owners identify the risk avoidance that may be holding them back by highlighting 5 of its most common forms:
Excuse 1: “The timing isn’t right.” As a young commodities broker right out of college, Panaggio recalls receiving a call from a client named Steve each morning. Steve was, as Panaggio puts it, a “prisoner of hope” who always asked the same question, “Where is gold this morning?” When gold was higher than the day before, he’d comment, “Ah, missed it again.” If it was trading lower, he said, “Let’s wait and get it at the bottom.” Steve missed the biggest increase in gold in over 50 years because he waited for the exact moment to make a move, and based on his perception, that moment never came.
“All over the country, there are entrepreneurs—or wannabe entrepreneurs—who are just like Steve,” Panaggio confirms. “Business plans sit in boxes or on hard drives as their creators wait for the right conditions: funding, free time, better economic conditions. And plenty of existing businesses remain less successful than their owners would like because those very same owners are hoping that tomorrow conditions will be just a little bit better for advancing their goals.
“Also, keep in mind that being a ‘prisoner of hope’ doesn’t just apply to growth,” Panaggio adds. “Besides forgoing an opportunity for success because they are waiting for ideal conditions, many leaders fail to solve problems or correct mistakes because, in their minds, the timing wasn’t right. And when you’re bootstrapping a business, a mistake can be even more costly than not leveraging a chance for advancement.”
Excuse 2: “I tried that once, and it didn’t work.” According to Panaggio, those words are most often uttered by small business owners in reference to marketing. Perhaps you’ve been there: You allocated a large part of your budget to producing a television commercial, for instance, but barely noticed any increase in your business. Or maybe you offered an online deal to new customers, only to realize that the discount you advertised was a little too generous and wouldn’t allow you to make any profits. Your one-time marketing failure has convinced you not to try again.
“Yes, marketing is far from certain,” Panaggio acknowledges. “It can be expensive, and it’s hard to accurately predict what customers will respond to. But without proactive long-term and consistent marketing, businesses die. Avoiding investing in marketing—or even cutting back on it—because one campaign didn’t produce the desired results is a risk you can’t afford to take.”
Excuse 3: “If I just had XYZ gadget…” “If I just had faster computers, my team could respond to customer emails on a more timely basis.” “If I just had the latest supply chain management software, my company could fulfill orders more quickly.” When you’re an entrepreneur, there are a million “If I just had…”s, and often, they center around technology. Remember, though, you can spend forever waiting on the next best thing—and often, says Panaggio, that “next best thing” isn’t as necessary as you thought.
“On the infrequent occasions when the Internet in my office goes down, everyone has one concern: ‘What should we do now? Go to lunch?’” Panaggio recounts. “My answer is always this: ‘If you were on a deserted island with no supermarket, would you just let yourself starve, or would you figure out a way to survive? You may not be online, but your phone still works. Pretend the Internet hasn’t been invented yet and call a few customers. Survive.’
“My point is, by viewing technology as a necessity, we create our own prison,” he states. “We no longer use it as a tool. Instead, we are trapped by it. Remember, the road to success is throughâ€¨action, not accessories. Countless success stories have been written with nothing more than ink and paper, a rotary phone, and plain determination. While tools, technology, and accessories might be helpful, they do not guarantee success. Effort guarantees success—you have to keep your foot on the accelerator longer and more often than your competitor.”
Excuse 4: “I’m still working on the plan.” Let’s say that you want to move to the next level, whatever that happens to be for your business. So you begin planning, preparing for every possible scenario. You define contingencies with backup plans full of redundancies. You sometimes wonder how anyone could fail with a plan that covers all possibilities and that offers each a solution. But here’s what you’re not taking into account: While your perfect plan might prevent you from failing, it will also hold you back from succeeding if it’s never executed.
“To be absolutely clear, planning is a good thing,” Panaggio clarifies. “However, for many entrepreneurs, the solution to avoiding the risk of reality is to keep planning. After all, they tell themselves, you must have a plan to be successful; ‘winging it’ is a blueprint for failure. The fact is, with planning as a comfort zone, you can easily replace the reality of execution with theoretical forecasting and ‘what-if’ modeling. For that reason, many risk-averse entrepreneurs miss opportunities and fail to build actual businesses in the act of building virtual businesses. Don’t make that mistake.”
Excuse 5: “It’s a good idea, but circumstances have changed.” “I was ready to pull the trigger, but then the market changed and I had to reassess.” “I had to set back the original product launch date because I was just too busy to get everything ready.” “Preliminary research showed that this idea might not be as lucrative as we thought, so we scrapped it altogether and went back to the drawing board.” Sound familiar? If so, you may be moving the target.
Tom Panaggio has enjoyed a 30-year entrepreneurial career as cofounder of two successful direct marketing companies. For more information, visit www.TheRiskAdvantage.com.