Herman School of Business
Don't Give It Your All...
There seems to be a notion that when you have an idea that you want turned into a business that you should “do whatever it takes” to make it work. And then there is the notion that you should “pour everything you have into the business” and not expect others to put up the money for you.
Bull Hockey.
For sure the number one reason a business fails is the lack of capital to keep it alive. And there is something to the notion that others shouldn’t take a risk in you until you are willing to risk everything yourself. But this myth should be put to rest right now, right here. When Warren Buffet sees a good idea he doesn’t put “everything he has” in it. He risks some of what he has and then no more. When Trump, T Boone Pickens, or I see a deal we think can make us money we stop short of risking it all on that deal.
Newbies to business are at the greatest risk. And since it is their idea, no one will believe in it if they don’t have a passion that assures the world it will be a huge success. But if you think you have to commit financial suicide for your idea…then I wouldn’t even want to invest with you. It says you are willing to lose all for one good idea. In business there are many decisions made about ideas every day. If you can bet the ranch on one notion how do I know you won’t “bet the company” on one good idea or notion?
The biggest business mistake I ever made was “staying to long at the Fair.” This means I felt that the business was going under…and I went deeper into my own pocket and grabbed the last nickel down there by the lint in the bottom…and then hit my last credit card for the few dollars left on my available limit…and then finally realized I was right earlier…the doors had to close. At that point I not only lost my business…I lost all I had.
We often hear from successful people that they risked everything they had and it worked! They were rewarded for putting all into their venture. My bet is they were extremely lucky. You might ask yourself why not put in the last ten bucks when you have already lost ten thousand? The answer is that you should only put money in when there are some odds it can still work…and that as soon as that last ten dollars is invested there will be a return. If you are just pouring money…your last dollars…into the business to stay alive so tomorrow the miracle can save you then STOP. If that is the case close the doors and take your last ten dollars to start the next venture.
People who speculate in business ventures know they are taking a chance and assume a certain amount of risk based on the perceived reward. True investors are willing to put money into your venture based solely on the expected outcome, weighing in that you too have something at risk. They don’t expect that you have to be living in a paper box eating Mac and Cheese before they take a risk on you.
- Posted: 19 August 2008
- Comments: 0
- Category: Business success
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