It’s a new year with lots of new opportunities that will present themselves. And if you’re like me, you get excited about the possibilities out there for your business. One of the things we always try to remember is that as a boutique business, you only play to be the best. And that takes some calculated risks.
Your customers expect you to try the extraordinary. They want you to discover or invent the newest, coolest, hardest-to-find, and most-difficult-to-copy items and services. Risk can be your friend. And you have to understand when to take them to win.
For example: Let’s say you’re considering buying a new building or retail space. To justify the risk, you need to check your books and ensure that your business can sustain the growth. We don’t recommend leaping into a risk based on hopes and dreams. That’s where we see otherwise stable businesses who are growing in a healthy way get into trouble.
If your business today can support the growth—the new building, the new technology, the warehouse space—go for it. But if you’re just crossing your fingers that the risk will produce more business, see if you can create more business before taking the leap.
Ask yourself these questions when you think a growth strategy is risky:
- How much will it cost if it flops? For example: If a risk requires you to carry a large inventory, add extreme overhead, or change your current mode of operation, it should be carefully considered, and you should have an idea of how much it will cost if you fail.
- How valuable is it to promote yourself as an early adopter? Will this risk enhance your image as an early adopter, and will customers appreciate that? If your customers view you as someone who offers the best products and service, then they expect you to take risks and will probably support you through a few flops as long as it doesn’t change your brand.
- Is it consistent with my brand? Are you the rogue copywriter who submits risque material to magazines or pushes the envelope with advertising messages? Or are you the sensible jeweler who only buys the absolute highest quality and stands behind everything you sell? Some risks can be weighed when you consider whether they’re consistent with your image and reputation. Your brand will lead you in the right direction. Follow it.
- Will my customers love it? Taking risks for any other reason than delighting your customers is the riskiest business of them all. If your customer won’t love a new product but you’re getting a hot deal from a manufacturer, then you’re doing yourself a huge injustice. Take risks when your customer will love you for it, and avoid risks for any other reason.
We’re launching our first book in April, Worth Every Penny. Taking the risk to invest so much time and money into such a big project was something we had to think really hard about. We put our heart and soul, not to mention a lot of time, into writing the book last year. Other projects took a back seat so that we could write the book and continue to do so. Soon all the things we teach and practice will be available for the world to see. It’s scary to put yourself out there in the way we are, but it’s a risk we decided was worth taking. What risks are you considering taking in your business this year? How do you evaluate whether they are worth taking?
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