How to take more risk

“All entities move and nothing remains still.” ~Heraclitus

I’m not a fan of taking wild risks. I don’t play the lottery or go to Vegas, or make big stock market investments. Yet I know that businesses only thrive when you push them forward, when you risk what you have in order to make something better.

Dice on a craps tableWe all started our businesses because we saw a hole, an unmet need in the marketplace. But the marketplace changes, we change and we have to continue to search for and seek out new holes — new markets. Our business cannot remain static; we are learning new things, our clients’ businesses are changing and new competitors are entering the marketplace.

The riskiest thing we can do is to stand still.

I wish that I could rest on my laurels; keep doing the same things that I was doing 5 years ago, using the same sales methods and teaching the same tools. But the market has moved. The opportunity isn’t there anymore — it’s somewhere else — and I have to find it.

What are some risks you should be taking?

I’m not suggesting that you should start a new business or wildly jump into new markets; but there are some things you can do to that may seem risky yet they actually protect you against these market changes.

  1. Spend more money to get more clients. If your customer acquisition cost is low compared to your customer lifetime value, you should think about spending more money in marketing and sales. Yes, it will increase your customer acquisition cost and decrease your margins. But you are spending money to make money. (More information about these ratios.)
  2. Train your team. Investing in keeping your team’s skills on the cutting edge is risky because when they learn new skills it makes them more valuable. They ask for raises or get better offers from other companies. But the flip side is that they value the time and money you are spending on making them better. Those new skills are going to work right now for your business and your clients. Training is the engine that keeps your business moving.
  3. Offer new products or services. Be on the lookout for new products, services or opportunities. If you were starting a business today (in the same industry you are already in) what are the opportunities you see? How could you prototype that product? Are there clients asking you for something slightly different than what you are currently offering? Is there some new technology or methodology in your market that you need to adopt? (Interesting case study on one business owner who took this kind of risk.)
  4. Think about buying some growth. When Yahoo! found itself playing it safe it went out and found a company that had captured the interest of the audience they were looking for. Time will tell if spending $1B on Tumblr is going to pay off. But acquiring some knowledge or expertise that can help you to serve your core customers better can really pay off. There are going to be more opportunities in the coming years as Boomers retire.

Where are there opportunities for you to take more risk now to create a more prosperous future?

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