A lot of people think of small business and entrepreneurship as a highly risky venture. Everyone knows someone – maybe even someone in their family or circle of friends – who went into business and it didn’t work out.
There are all kinds of stats floating around on the internet about how 1 in 5 small businesses fail, about how 80% aren’t around after five years, and how generally hard it is to make it as a small business owner.
I would argue though that a lot of those failures could have easily been predicted from the very beginning and avoided if only the people trying them had thought things through.
Being a small business owner doesn’t have to be a guessing game or seat-of-your-pants operation, even though many are run that way. There are very clear predictors of success and if you don’t have enough of them stacked on your side when you start you face increasingly long odds of just getting lucky.
I believe that there are already enough unforeseeable risks and hurdles in surviving and then thriving as a small business that you don’t need to add any more in through poor planning or risky decision-making.
Essentially, I play business the same way I play Wordle – by giving myself every chance at success by the way I decide to run things.
Wordle, if you aren’t into word games and didn’t get stuck on your phone during COVID looking for something to distract yourself with, is a simple web-based word game. You get six chances to guess a five-letter word by entering five-letter word guesses. If the answer word has any of the letters in your guess word, they turn yellow. If the letter is in the same spot, it turns green. If you don’t get it in six tries, you lose. I don’t like to lose.
There are lots of different strategies people use for this, mostly centered around starting with words like “adieu” that have a lot of vowels to help you guess smarter. The problem with these approaches is you sometimes figure out a word contains “_ound” and the first letter could be “b”, “f”, “p”, “r”, “s” or “w” and you’ll run out of guesses before you find the answer.
But as it turns out, there is a different way to play this game that just about guarantees you never lose. It’s what I do, and it’s the same logic I apply to our business growth!
How To Beat Wordle and Win at Business Every Time!
The solution to being able to beat Wordle every time is to look at all the options and avoid the risk of getting into a situation where you have more options than you have guesses left to try them.
Here’s what I do: I always use the same four words for my first four guesses: BRAND, JUKES, CLOMP, and FIGHT unless I am sure I’ve solved it from just the first two or three.
Why do I use those four? Well, those give me 20 of the 26 most common letters in the alphabet with no repeats. Nearly every time I will get four or five letters in green or yellow from those four guesses and be able to solve it on the fifth turn. If I don’t, I know either there are letter repeats or it uses one of the 6 letters I didn’t try. Based on what I did get I can figure it out.
OK, so good for me but really what does this silly little app have to do with business?
The idea is the same – don’t rush into something with some guesses on what might work! Take the time to explore all options, look at every angle, and cover all the bases. Don’t assume you know what the answer is from a few half-formed ideas and hope you don’t run out of cash before you find out the solution.
The idea is to eliminate the inherent risks in business by planning ahead and coming up with a way to ensure that you aren’t taking a chance you don’t need to be taking.
Here are the two most common risks in business and the ways to avoid them:
- Market Risk – the risk that there aren’t enough customers to support the business. This is when you decide you want to open a Vegan Indian food restaurant in a very small town in the middle of cattle country. Or you’ve invented a new product that can trim both human and hamster nails in the same device. Or you are starting a service that offers both oil changes and massages at the same time. You very likely haven’t spent the time to ensure there are in fact enough customers you can reach and sell to that will support the business. It was an avoidable failure if you had done the homework, assessed the risk, and realized the market wasn’t there for your concept.
- Cash Risk – the risk that you run short on cash to keep the business afloat. If you operate in a way that requires you to put cash up to run the business first and then you get paid later, you can easily end up in a situation where you run out of cash to work before you’ve collected enough to continue. Knowing the payment cycles, calculating a sufficient reserve, and then not committing to more work until you can afford to all can mitigate this risk, but only if you understand it and plan for it. This can also happen when you don’t properly bid jobs or don’t understand the true profit margin you’ll get and then even when you do collect there isn’t enough cash to cover the bills. Knowing your numbers very well and then building a cushion on top of that is the key to overcoming this issue.
The basic message is to take the time to plan ahead, think through the ways you can eliminate the risks, and make sure you give yourself the very best chance of winning. Another way to think of winning is “not losing” and in business not losing is not doing things like I just outlined.
Before you commit yourself to something in your business, do everything you can to think through it and then eliminate all the risks you’re possibly going to face. Once you’ve done that, you can still run into problems, but you’ll be in a better position to handle them and less likely to have the unexpected pile on top of other problems you have that you could have avoided.
The more you are able to avoid risk and anticipate problems the better you’ll be able to actually grow and thrive because you won’t be spending your time just trying not to get crushed. Play smart business and I guarantee you’ll win in the end every time!