2.1 No Blind Risk Taking
The sky is the limit as the popular saying goes. This is without doubt the essence of the entrepreneur’s mindset, which results in great companies being created. So everyone should aim as high as they possibly can, to whatever their imagination can create, and they should plan without placing artificial limits or ceilings to what they can achieve. Mr Inderjit Singh – The Art and Science of Entrepreneurship.
No Blind Risk Taking
To be realistic, one should also never forget to be prepared for the worst. Even though the sky is the limit and we aim to go high, there will always be ups and downs in the journey. The ability to be a great entrepreneur is to manage the downs as well as the ups so that you come out ahead.
Entrepreneurs take risks in their plans and strategies, but they do not take Blind Risks. Instead they work on taking calculated risks, in order to cut down any unnecessary threats that may harm their position. The fact of life is that taking blind risks is irresponsible and reckless and people who take blind risks are not only irresponsible to themselves but also to the stakeholders involved in starting up a company. It is also reckless for someone to think that things will always go up and will never come down.
Question is how would you manage the downs and downturns? How do you come out unscathed or without much harm.
Preparation is the key, the better prepared you are, the less knocks you will take along the way.
Before you start on your venture, make sure you are not spending frivolously. Do not spend unnecessarily on items that you do not need. The more cash you have in hand, the easier it will be in the long run. Spend on the necessary things that will keep the company going, and will keep the staff happy. Remember CASH IS KING.
Truth be told, you cannot be prepared for every disaster that will hit you. There will be some that will be totally unforeseen, but it is necessary to plan for those that you can foresee. Do some contingency planning in advance, look for some extra suppliers (in case of shortage), put some other strategic plans in place. Don’t get caught off guard and be prepared with an alternative action plan when the need arises. Otherwise you will try to fight fires while trying to develop an alternative plan and this will not be an effective exercise.
The idea of contingency planning is to put safeguards to protect you in case of any foreseen problems. You do not have to use the exact plans that you have, but by preparing in advance, it gives you and your team a mindset, that if anything happens we will be able to solve it, rather than panicking and jumping overboard.
The confident entrepreneurs that you see walking around are not confident just like that. They have sat down and worked out their plans and strategies. By looking at their industry and market, they are able to see ahead and make plans for certain problems that they may face. They work hard to cut down the risks and to safeguard their interests, in order to make their ventures succeed.
Even though entrepreneurs do not take failure as the end of the road, just like everyone else, they would not want to fail too. So they prepare as much as possible, by doing their homework, not spending unnecessarily and putting safeguards in place to ensure as smooth a ride as possible.
I hope some of you will recall the tech bubble bursting in 2001. In that era, the stock markets were just booming and ballooning because of the growth of technology companies, especially the dot.com type. I recall investors in the stock market having a mindset that the stock prices will keep rising and will never fall, even though many stocks had ridiculous valuations. Even lay people, who have no idea of stock investing, risked their savings thinking the stock prices will keep rising. Well many learned lessons that while you can aim for the sky (making a lot of money in the stock market), they have to also be prepared for the worst case scenario of losing most of their money (price of stocks will surely correct to realistic levels and they can lose a lot of money and using borrowed money can cause a disaster in their lives).