Business people usually succeed because they take risks. But taking a chance is just that: As one former boss of mine used to say, “there ain’t no guarantees.” For that reason, I look at today’s “risky” times and think nothing is all that different now than before.
Even back in the boom of the 80’s and 90’s, risks were taken and some of those risks failed. It’s just that we didn’t hear much about failures because we were hearing too much about the many successes. To top it off, what we so often forget is that many businesses grew and made a lot of money during the great depression.
Risk is a matter of focus. Unfortunately, focusing on trivial technicalities often causes bad decisions. Take the stock market as an example: A business can make a profit, but because it only made a .24 cent profit instead of the predicted .25 cent profit, the company stocks go down. Here a company risked and came out ahead, but a narrow human focus of “not meeting estimates” causes a downturn in the markets. What could be more silly?
Why not look at the big picture? According to Reuters, the CEOs of the biggest American companies lowered their U.S. growth forecast to 2.2 percent this year from 2.4 percent in 2002. We can focus on being 0.2 percent lower than last year and get all glum, or we can focus on that fact that we’ll experience 2.2 percent growth, and that companies are continuing to strive for success.
What’s driving successful companies? A willingness to risk. And in times like these, it’s often the companies that take risks that are the ones that come out ahead down the road.
This principle isn’t new. In 1890, J.C. Newman was only 14 years old and an immigrant to the United States. He took an apprenticeship as a cigar maker and worked in the trade for five years – until a recession resulted in massive layoffs within the industry. At 19, the unemployed young cigar maker took a risk by borrowing $50 for tools and supplies, and began his own cigar company. Within 5 years Newman employed 70 people. He continued to grow, even through the depression, and the company has been passed on through the family. The J.C. Newman cigar company is still thriving today – because one young man more than 100 years ago took a risk.
Slow economic times are not times to sit in a corner and wait for things to get better. Not if you want to come out ahead. Those with vision are examining the field, looking for opportunity, measuring the benefits, and calculating the plan. They’re seeking a foothold while others are stepping back and “waiting the storm out.” When the economy turns, those with the foothold will be in a position to make great gains.
The same former boss who often said “there ain’t no guarantees” often told a story about a popular cigar company that did not fare as well as the J.C. Newman company. Although I’ve been unable to verify the story, I’m told that a popular cigar company decided to “save money” during the depression years and cut back on its advertising. They were the third-largest cigar company in the world and everyone knew their name: Why spend the money on advertising since everyone knew who they were?
The decision was ultimately fatal. Before long the company’s sales had fallen off terribly, and the company was unable to come back. They folded.
Why? They didn’t want to take a risk.
Now before I’m taken out of context, let me clarify: I’m advocating taking risks, not being reckless. And good risks are managed risks, which involves estimating the positive and negative ripple effects of an action, and choosing the action that brings the best return on investment with the lowest appraisement of danger.
In these risky times, nothing has changed. Except our focus. Where’s yours?