How To Laugh In The Face Of Risk

The holidays are upon us. This is a good time to reflect on the year which is now nearly passed. By almost anyone’s definition, this has been a challenging business year. For me, the challenges of 2008 make me think about risk and reward. Nearly every day in our business lives we face decisions that cause us to assess the amount of risk we are willing to take and balance that against the potential returns or rewards we may realize as a result of taking risks. In my opinion, the best way to minimize risk and still achieve a desirable return is to be thorough in your planning and research. Let me give you an example that is near and dear to my heart.

This year, I personally took a very big risk. After twenty years I decided to leave the comfort of a big company, a good salary and numerous benefits to join a partnership of permanent, part-time CFOs with a robust business model and strong support structure but no guarantee of income. Why did I take this risk? First, I thoroughly researched B2B CFO® from all angles and repeatedly weighed the possible rewards against the risk of no longer receiving a guaranteed paycheck every two weeks. Next was to build a detailed monthly cash flow plan for my business with realistic goals. The goals I set were based on information obtained from the firm and its partners. After my meetings with the people in the firm, it was clear I wouldn’t be alone in this endeavor and that I was backed by a very strong and values based organization. Only after careful examination of all of this information and ensuring that my values and goals were in alignment with those of B2B CFO® did I make the decision to take the risk, join the partnership, and start my own business.

The approach I applied when I decided to join B2B CFO® is no different than the one business owners take when they evaluate different alternatives for their businesses. I chose to be aggressive, but in conjunction with that I set challenging but reachable goals, I had a clear plan to help me achieve those goals, and a desirable return for my risk. The same can apply for any business and now is a time when almost every decision you take may appear risky in a challenging economic environment. One option could be to crawl in a hole somewhere and avoid risk at all costs. We continue to read about a long recession coming and difficult times ahead. Despite this, I believe that smart risk-taking backed by good research and planning now will pay dividends in the future. We need only look at the enormous success Warren Buffett has enjoyed in his professional life and to link that with his consistent track record of being aggressive when all those around him were scared to inaction. Do not forget, it is critical to financially analyze opportunities and plan for the successful execution of your opportunities, another trait consistently demonstrated by Buffett. Without the analysis, you will face an inordinate amount of risk, similar to driving down an icy road at night at high speeds with your lights off. A good financial partner for your business will help you navigate this road by giving you a financial roadmap that shines light on the path ahead toward your destination.

After several months building my business with B2B CFO®, I am happy to report that I have met the financial goals I laid out in my cash flow plan. I also very much enjoy the opportunities I have to help my clients achieve their cash flow and other financial goals. The independence to do what is right for my clients all the time and see them succeed is very gratifying.

With a new year comes a new government with new policies and the hope of new opportunities for every business owner. This particular wave of change will undoubtedly be dramatic. For what it’s worth, my advice is to stay strong and alert of the changes, but do not stop taking prudent risks for your business. Stay alert of changes that will impact your business, do your research, understand the financial implications of your decisions and plan for solid execution. If we take this approach, 2009 and beyond will result in success for all of us.

In some way, everyone in receipt of this newsletter has helped me to have a successful start of my new business this year. For that I am very appreciative. I thank you and I wish you all a happy and relaxing holiday season.