Misconception # 7: "Business is Risky?"

I wanna make you and offer you can't refuse!"
I wanna make you and offer you can't refuse!" | Source
"You're Fired!"
"You're Fired!" | Source
I'll work for a carrot!
I'll work for a carrot! | Source
Source
"Hmmm? Lemonade Stand? I'll get back to you on that!."
"Hmmm? Lemonade Stand? I'll get back to you on that!." | Source

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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Comments 13 comments

dahoglund profile image

dahoglund 5 years ago from Wisconsin Rapids

I pretty much lay it out. My son and his wife a few years ago got a good price on selling their home and used the proceeds to buy another house in a different lower cost area and start a second hand store.She had done pretty well selling on ebay so they thought they could make it. However, after the administration went democrat the business kept getting worse. He ended up going back to his old jog (lucky his employer was willing to hire him back after several years)I am rather proud of them and I am sure they will try again.


Reynold Jay profile image

Reynold Jay 5 years ago from Saginaw, Michigan Author

And it was not their fault the business did not do well, as you said. It is nearly impossible to get much going during this business climate.


Gypsy Rose Lee profile image

Gypsy Rose Lee 5 years ago from Riga, Latvia

He who doesn't risk gains nothing.


Reynold Jay profile image

Reynold Jay 5 years ago from Saginaw, Michigan Author

I'm ready to book a flight to Latvia and get something started there!


Sueswan 5 years ago

If everybody had there own business then who would they have to do the work?


MsDora profile image

MsDora 5 years ago from The Caribbean

You make it quite clear: control, control-- and perhaps faith to offset the risk factor. Thanks!


Reynold Jay profile image

Reynold Jay 5 years ago from Saginaw, Michigan Author

Sue: The world needs all of us, workers bees, soldiers and queens.

Ms. Dora: Smart management is most often the key to operating a successful bussiness.


poohfect87 profile image

poohfect87 5 years ago from Gaithersburg, Maryland

I've had some great ideas but would never understand business to get them rolling. I like your thoughts on reducing risks, but to thoroughly understand what business is all about might be out of my skill set.


Reynold Jay profile image

Reynold Jay 5 years ago from Saginaw, Michigan Author

That is OK not to be a high-roller! Most of us do not have the education as we come from a heritage of workers. Starting up a business takes special skills. Sometimes buying a going business could work for someone who does not have the start-up skills in hand.


Credence2 profile image

Credence2 5 years ago from Florida (Space Coast)

Great video, Reynold, I hope NASA get the plans in place for what is next beyond the Shuttle.

About business startups, I don't know, I heard that there is a large failure rate, where does the capital come from during that fragile start up period?

I think that it is much difficult than you make it appear in your article. Outside of expertise at what your service or product is, there are an endless number of other variables, that are just as important. You would have to hire people to stay on top of specified aspects. I am certainly not jumping out of this Cessna without a parachute, a lot of these guys have risks almost as bad as climbing rock faces without ropes and safety equipment. This has been food for thought, thanks Cred2


Reynold Jay profile image

Reynold Jay 5 years ago from Saginaw, Michigan Author

Credence2--Large operations scare me and I do know that virtually anything at all has its risks. Certainly anyone contmeplating a new business needs a lot of skills to to pull it off.


prairieprincess profile image

prairieprincess 4 years ago from Canada

Reynold, what an excellent explanation of the advantages of running a business, over merely doing a job. Yes, with more control, your risk goes down. I had never heard it explained exactly this way, but it is so true. Thank you for teaching me today, teach! Have a wonderful day.


Reynold Jay profile image

Reynold Jay 4 years ago from Saginaw, Michigan Author

Thanks for the comment. I imagine top-notch writting is one way to reduce the risk when one chooses to be a writer.

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