There is a big difference between taking a calculated risk and gambling with your business.
One of the things I love as an entrepreneur is the excitement of doing new things – creating a new product offering, a new service, working with new partners, pursuing new customers. I enjoy the freedom. Whatever my mind can conceive, I can potentially achieve. I love that there is a whole world of possibilities out there.
However, this freedom comes with risk. Not everything you think of should be pursued. There has to be a fair amount of due diligence performed. One must take care to ensure a proper balance between risk and reward. So what are some of the things that need to be considered before jumping into a new business venture? Let me suggest several things. This list is by no means authoritative or exhaustive, nor is it in any particular order. Each person’s situation will be different. So, please take my list and add your elements to it.
Some Things To Consider Before You Venture Out
1. Complimentary. Does this new venture offer something completely new or is it related to your current business offerings? Offering a new product or service that compliments what you already provide makes much more sense than starting something completely new for which you have little or no expertise, corporate knowledge, customer base or talent. That is not to say that offering something entirely new is out of the question, but that it brings greater risk than a complimentary offering. Your current customers, a great place to sell your new offering, will be more likely to consider a complimentary offering than an entirely new offering. An example of a new complimentary offering would be to offer consulting services to compliment the software you already sell.
2. Assumptions. What you assume may make or break the entire venture. Are your assumptions realistic? Are your estimates about customer demand, potential revenue, talent availability, start-up costs all realistic or overly optimistic? Be conservative in your estimates, then add another 25% for error or the unexpected.
3. Risk. The real question here is can you afford to lose the entire venture’s investment if it goes bust? You do not want to put the whole of your current business at risk if the new venture doesn’t work. Please understand I’m not saying avoid all risk. As entrepreneurs, the risk is part of our world, and we thrive in it. But, there is a big difference between taking a calculated risk and gambling with your business. Don’t gamble. Know the risks.
4. Passion. Why do you want to do this? What is driving you? Sure, there are the financial benefits, and I’m not discounting them. But my experience with both successful and failed ventures has been that when I was more passionate about the venture, I was more successful. When I believed in the venture, that it would help people or organizations I care about, I was more committed. You need to be ‘all in’ as they say in poker. If you are not completely passionate and committed to this venture, it will show in your planning, communications, leadership, and results. So, know why you want to do this.
These are just a few things you need to consider before deciding on that new venture. Yes, there are other things like your competitors, the local economy, government regulations, investors, but the list above should lay the foundation for all the other factors you must consider.
What do you think? Leave me a comment below. I’d love to hear from you. Also, please join my blog to get future updates.