Misconception # 7: "Business is Risky?"
Misconception No.7 -- "Business Is Risky"
Business, risk and gambling go hand-in-hand, according to some people. Almost everyone does know of someone who lost all of his money in a business enterprise. All kinds of things can go wrong for a person in business, and it is only when all the proper ingredients for success are present that an enterprise succeeds.
Once an individual has success with his original business, the owner may often branch out into other endeavors. He may invest in real estate, provide venture capital for other enterprises, or speculate in stocks and bonds. His activities are fairly well known by the community at this point and almost anyone could point a finger and say, “He is a wheeler-dealer who could lose it all very quickly.”
Anyone could lose it all very quickly if he were not in control, but like the captain of a ship, he is at the helm and can take the ship wherever he pleases.
Business and Baseball?
Business is much like a baseball game in which the captain of the team is determined to win. Since the odds are only fifty percent that he may win the game, he may decide to increase the odds in his favor by obtaining the best players for his team, writing the rule book, and hiring the officials. At this point he may decide he has a ninety percent chance of winning the ball game but leaves an option in the rule book that says he can change the rules at any given moment. With his final coup de grace, the opposing team might as well stay home since it is obvious they cannot possibly win.
The smart businessman does exactly the same thing. He owns the business, hires his employees, determines the scope and activities of the enterprise, and provides good management. He tries to cover all the bases so that his enterprise has a 99.44 percent chance of success. We leave the .56 percent chance of failure open in the event that benevolent beings from outer space land and declare that businesses are no longer needed since the aliens will provide everything we need.
By exercising control over an enterprise, the risk factor and the gambling nature of the business are reduced dramatically. Imagine that an enterprise's success, for example, would be determined by the turn of a roulette wheel. Without any control of the outcome of the game, a gambler has only one chance in thirty-eight of success when he bets a single number.
Each time an element of control is injected in the game, the odds of winning become much better. Eventually, the odds become thirty-eight to one that you will win. Your gambling is restricted to avoiding the one losing number on the wheel. If you have a system of betting one chip at a time, the fact that you may lose one chip for every thirty-seven you win would be most encouraging. In time you'd accumulate a fortune!
It is not an Easy Task!
The opponents are right! Business is risky. However, it is the primary function of management to reduce the risk and increase the odds for success. Anyone who believes that business is a giant crap shoot hasn't thoroughly examined what good business is all about.
An individual who says he would rather hold on to the safety of his job rather than begin a small enterprise with his idea, because business is risky, is deluding himself. Perhaps he is happy working eight hours a day and is looking for excuses not to get involved in life. Many individuals are simply looking for a comfortable life in which little effort of any kind is involved.
Update: During these very difficult times going into business can be much riskier than ususal. Watchdogg would suggest that "This is not a good time to set up a lemonade stand!"
This article reprinted from Born to be Rich
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