Risk vs Reward in Business

We recently took our 10 and 12 year old grandsons to the beach in Galveston.  They had purchased a big red ball to play with on the beach. After a time, boredom set in.   The water and swimming were a stronger siren song for them.  In they went with the big red ball!

For a while tossing the red ball was fun.  Suddenly, a gust came from the shore and blew the red ball away from them.  The more adventurous of the boys immediately began chasing the wind-blown ball. The lightness of the ball caused it to float above the waves and push farther and farther out instead of being pushed back to shore.

Soon my grandson was chest deep in the water, and the ball was increasingly floating farther and farther away. I saw the situation clearly, and started stripping down to rescue him if he continued going deeper.  Just as I entered the water, he turned his head and saw me coming.

He immediately made a decision to stop chasing his red ball and let the wind take it where it wanted.  The boys came back to dry land to warm up. There were a few moments of sadness about losing the ball.

I used the experience as a teachable moment. We talked about the value of the ball vs. the potential risk of continuing to chase it into deeper water. We also talked about the fact that it had a pretty low dollar value and that it could be easily replaced.

How can you apply this lesson to your business?

Have you ever found yourself continuing to pursue a prospective client long after it was clear that they were not that “into you” or your product or service? How do you decide to move on?

• “If it’s not a “hell yes,” then it’s a “no.” Move on to the next one on your list. Work with people who are enthusiastic about the value you bring to their lives. This was valuable advice a consultant shared with us.
• Recognize that some decisions are made on emotion and not data. Sending one more spreadsheet or brochure to prove your point may not move the needle in your favor.  A Realtor® friend confirmed that this happens in home purchases all the time. Clients fall in love with a house not because it’s the best deal but for some emotional draw to living there with their family. They start seeing themselves experiencing the home for themselves.
• Decisions may be influenced by longer-term relationships, even if the person is not an expert in your field.  This happened to me recently when the prospective client’s carpool mates talked him out of what he had previously concluded was a sound decision for his family. They did not have the background or expertise or even all the information relevant to my client’s unique goals and desires but they got the upper hand. He was uncomfortable going against the incomplete advice of his friends.

Have you ever continued to pursue a new business initiative long past the opportunity?

I have a saying taped to my desk, “The opportunity of a lifetime must be seized within the lifetime of the opportunity.”

I am not sure who to attribute that saying to (maybe a fortune cookie?) but it grounds me as a reminder that I have to “strike while the iron is hot.”

Assess your motivatons

Ask yourself these questions and answer honestly before you start chasing a new dream or a new prospect:

• Are you pursuing an opportunity that will add incremental revenue and profits to your core business?
• Are you chasing a dream that is truly innovative and disruptive with great future potential?
• Are you dreaming about something that may or may not come to fruition? Sometimes, it’s just mentally stimulating and you enjoy it more than the boring day-to-day part of your business that pays the bills. I will challenge you to determine how much distraction your business can afford.

Chase your dream, the smart way

How will you know if your chase is working out? Here’s an easy 4 step plan to determine if chasing your “red ball” is helping your business.

1. Set priorities for the next 30 days.
2. Budget time for each priority, see how much revenue producing time might be remaining.
3. Track your results and repeat for the next 30 days.
4. Try this exercise 3 times and learn if you have time for this chase.

Value for your time

When considering chasing a dream, do you put a value on your time?  Time is the one non-recoverable resource we have!  

If you pursue your dream, what else will be sacrificed to all the time necessary for this dream?  

I happen to be one who regularly underestimates the time necessary to complete a project.  My staff is well aware of this reality and regularly speaks up to keep me grounded on time commitments necessary.  I believe most entrepreneurs suffer from this same malady.

Reality of Limits

Like time, there is only so much we can do in a given block of time.  Also are we talented in the skills it takes to complete the task?  

Do you seek counsel from other trusted business advisors who are honest with you? I use an exercise developed by Dan Sullivan, The Strategic Coach®. See www.strategiccoach.com, called Attention Protector™.  

It forces me to prioritize what I want to accomplish over the next 90 days and why.  For me, the most important part is budgeting time for each project and recognizing that I have a finite amount of time.

Only you can determine if chasing your dream is worth the risk of losing time you could spend doing something else. Don’t be afraid to start the chase, just make sure you know when to let a dream go and concentrate on something else.

– Ron Schutz, Author