I define risk is the fear of losing something we consider to be very valuable to us. The loss of it creates pain. Most people want to avoid such pain. If they determine a certain activity can possibly create pain, they label it as “risky” and stay away from it.

Life is risky

Everything we do has some degree of risk attached to it. Taking a shower is risky because we could slip, fall and break our hip. Playing in a playground is risky because a child could fall from a height and break his bones (my son almost did once). Crossing a road could get you hit by a car. You could even choke on the food you are eating and die. Yet, it’s funny how we don’t see these things as being “risky”. We have learned how to manage these risks. We chew our food so we don’t choke on it. We look on both sides of the road to make sure there is no approaching vehicle before we cross the road. We keep a eye on our kids at the park to make sure they are safe. And if we feel there is a danger, we ask them to be careful or lend them a hand until they are at a safe spot.

People fear the stock market. I did a decade ago. Maybe you do too. They stay away from it because they believe it to be very risky. Yet, there are millions who make money in the stock market. How can that happen? The answer is education. Warren Buffett said this a long time ago, “Risk comes from not knowing what you are doing.” The more you learn about a company and how it runs it business, your capability of making a quality decision improves. If you like what you find out about a company and its future prospects, invest in it. Or else, don’t.

Risks can be managed

Can I share a secret about risk with you? It can be managed.

Car accidents happen everyday. In some, people die. Yet, you and I get in our car every morning and drive. We can do this is because we have learned how to manage the risk. We have a “process” we never think about. We wear seat belts, we follow the driving rules. We do not speed. We do not change lanes without turning on the indicator first. We do not enter the wrong way. You get the point. Despite all that, can we get into an accident? Sure! Doing these things minimizes risk. It does not eliminate them. But, it minimizes the risk to a level where we become comfortable driving the car.

There are many frameworks out there that help you determine whether to take a certain risk of not. I want to share one of my favorites with you here. So, here’s how it works.

For this example, let’s say you are a family man with kids and have a cushy, comfortable job. You are considering whether to start a business of your own. You want to, but your wife sees it as very risky. In this case, here’s what you would do.

Take a pen and a piece of paper. Sit down with your wife at the dining table. Fold the paper in half and then fold it again so 4-columns are created on the paper. At the top of the first column, write “Worst Case Scenarios”.

Worst Case Scenarios

With your wife’s help, list every single worst case scenario that could happen by you starting a new business. Here are some examples to get you started.

• Your business could fail.
• You could die … not that businesses kill anybody but yours could. There’s always a first for something.
• You could get sued by an employee or a customer.
• Your employees could steal from you.
• You would be so busy building the business, you would have no time to spend with your family.

Recovery Time

At the top of the next column, write down, “Recovery Time”. If an above listed scenario was to come true, how long do you believe it would take for you to re-create your life to the same point where you are today? Write down the recovery time next to each scenario you listed.

Best Case Scenarios

On the top of the third column, write “Best Case Scenarios”. If you were to start a business and it was to succeed, how could your life change for the better? What could you do that you cannot do now because of either time or money constraints? List down every single scenario possible.

• Could you take more vacations? at better destinations?
• Could you pay for your children’s college?
• Could you retire early and comfortably?
• Could you take care of your parents in their retirement?
• Could you donate to the charity of your choice?
• Would you travel the world the way you want?

Mitigation Tactics

Title the last column with “Mitigation Tactics”. What actions can you take to minimize each of the risks you listed in the “Worst-case scenarios” column? Can you start a low-cost business on a part-time basis and still continue working on your full-time job? Can you buy insurance to avoid losses from a lawsuit? Can you register it as a Limited Liability Company so your personal assets are protected? Can you put security procedures in place to avoid employees stealing from you? Can you hire some people so you the time it takes to build your business doesn’t affect your health or relationship with your family? Can you purchase substantial life insurance in an event you die prematurely?

Almost every risk you will ever encounter can be mitigated. The only questions are … what steps are you going to take to mitigate the risk? And how good is your mitigation plan? A better stronger plan offers you peace of mind and a sense of security for your family.

Decision Time

Now that you have listed the pros and cons, it’s decision time. Based on the sheet in front of you, can you make a quality decision? I’d say yes. This process has worked for me almost always time. If I cannot come up with good mitigation tactics, the decisions is a firm no. In most other cases, it’s a yes.

Last Question …

What does your decision process look like? Share it below.

Years ago, I attended at a weekend business seminar down in Richmond, VA. Speakers taught us everything related to business – sales, marketing, building a team, managing your money and much more. However, there was this one speaker by the name of Kevin Bell. He shared 3 reasons why people procrastinate. The reason I remember this so vividly is because it created a paradigm shift in my thinking.

I am listing them here for you.

1. We do not respect the process.
2. We do not respect the result.
3. We do not respect ourselves.

We do not respect the process

Getting in shape is incredible. You look good, you feel good and you live longer (well, unless of course you get hit by a Coors beer truck). But it’s a process. And the process is non-discriminatory as well as mandatory . Regardless of who you are, if you are overweight and want to get in shape, you need to develop healthy eating habits, better sleeping patterns and consistency in workout routines for extended periods of time.

When a saleswoman wants to make a sale, she has to go through a process of finding a prospect, calling the prospect, doing a presentation, following up with the prospect to answer any questions and finally making the sale. If she misses or refuses to do any of the steps in the process, the probability of her not making the sale is automatically high.

So, why do we not respect the process?

• It’s not always easy and takes work.
• The activities of the process are not in our comfort zone and requires additional learning on our part.
• The results are not instant which makes it difficult to follow-through for longer period.
• The repercussions of not going through the process are invisible in the short term.

We don’t respect the results

Losing weight and getting in shape is a great idea, but you know what? Round is a shape too. How many times have you heard people (those who look like a bottle of coke) say this? Making one more sale will make me another $500. But, do I really need it? I already have $8,500 in commissions this month. Why not take the time off and enjoy it instead?

The second reason we fail is not because we are lazy or unwilling to go through whatever it takes. It’s because we might not care about the result.

We also might not see any value of the result. And, if the result is of no value to us, then why pay the price (going through the process).

We don’t respect ourselves

This one’s a biggie, at least to me. This has more to do with a person’s self image than anything else. If we don’t think we are worthy enough of achieving a goal, chances are we most likely won’t even attempt it. We also become conscious of other people’s thoughts about us and if we don’t think they’ll approve, we procrastinate.

So, why am I writing about this now?

Because, this blog was supposed to be started years ago, like back in 2011 or 2012. But, it didn’t. I procrastinated for all three reasons listed above. I finally had to say, No more! No more am I going to be afraid of other peoples thoughts about my writing. No more am I going to be afraid of what other people thought about MY thoughts. No more am I going to be afraid of having to write one lengthy post a week. No more!

I’m excited to see where this blog takes me. And if nothing else, it’s a fantastic way for me to dump and aggregate all my thoughts in one place.