I had a conversation a few weeks ago with a friend who’s thinking about leaving her job to start her own thing. She asked for my advice, so I gave her something I wish I’d thought more about at the start: When you start a business, you need to figure out your level of risk.
Some people are willing to place big bets on their business. There are plenty of stories out there about people who hired big teams before they had a proven product or put tens of thousands of dollars on a credit card with no clear path to paying off that debt. Some are OK taking on a lot of risk.
I tend to be a bit more risk-adverse. So much of my business is built around coaching calls, where I work with small teams for a low annual fee. If I took on larger projects, I’d make a lot more money, but coaching is far more stable — I start the year knowing how much I’ll be bringing in that year. My coaching clients tend to renew their contracts year after year. Bigger projects, on the other hand, come and go.
Before you start, it really helps to understand how much risk you’re willing to take on. My strategy means that my business has a fairly high floor but a slightly lower ceiling. You might be willing to take bigger swings for a bigger reward — even if it means the chance of failure is a lot higher.
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That photo of dice comes via Zoshua Colah and Unsplash.