The Risk & Rewards of Investing in a Business

risk and rewards of investing in a business

Deciding to start a business can be an intense decision making process. As we help professionals make the leap from Corporate America to starting a consulting or coaching business, we hear various versions of the risk/reward conversation. “How do I know that the business is going to be successful?” I have to make an investment up front and how do I know this will work?” These are fair questions to evaluate prior to making a decision to start your own business. However, it really doesn’t matter what kind of business you are looking to start – there is going to be a financial investment and a time commitment. If you decide to start a landscaping business, you have to purchase trucks and equipment prior to having the guarantee of having enough customers to keep the business afloat. If you wanted to go into some sort of retail business, you will need to invest in inventory and store front space without an assurance that customers will want to shop at your store and cross your threshold. Let’s say you are a licensed attorney or accountant and you want to start your own firm, you may have all the tactical skills necessary to provide excellent law or financial services, but that does not mean you will have enough customers walking through your door.

So, should the questions not be focused on risk (although we are not saying the potential risk is real) but rather on what plan needs to be put in place that mitigate the risk of not enough customers which ultimately leads to lack of financial success?

When we work with new consultants and coaches as they begin their practice, we commit a great deal of time helping them define their market niche, create their framing statement (how they communicate the value their services provide), and help them develop a marketing plan that directly addresses their defined market niche, so when properly implemented mitigates the risk and ultimate question, “Will this really work?”

The risks needs to be evaluated; however, it has been our experience that seasoned professionals when given the best information and the best tools typically take those resources, add their style, and reach success. In fact, they have done it multiple times in their careers for other companies. Why wouldn’t the same be true of starting a business of your own?

The rewards of starting your own business usually revolve around financial freedom, life balance, getting off the road to spend time with your family, having time to enjoy whatever hobbies you have thought about for awhile, and the list goes on.

What are the rewards that would be meaningful for you? Spend some time listing the rewards on a clean sheet of paper or word document. Use the brainstorming rule of just listing all the rewards. After you have exhausted the listing exercise, go back to each individual reward and write a short paragraph about what accomplishing that reward would look like for you and your family. 

For example: Having my own business would allow me to spend more time with my family.

I would miss a minimal number of baseball games and band concerts. My spouse would not have to shoulder the kids’ schedules and activities. My spouse and I can do more things together as a couple. We could actually use the country club membership perks together. I could work on my antique car, etc.

Potential risk causes fear and fear is defined as false expectations appearing real. Evaluate the risk, so you make a smart decision. However, spend more time focusing on the rewards. Rewards provide motivation. If the list of rewards is longer than the risks, then investing in a business can be a very smart decision. 

There are no guarantees in business or life. Why not give yourself the ability to say, “I tried and was successful” instead of, “I wish I tried.”

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