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Small Business Digest


Avoiding Risk Can Lead To Missed Opportunities, Eventual Failure

There is a whole science built on the analysis of risk.

Unfortunately, most small business leaders are not sophisticated risk analyzers.

Rather, they attempt to weigh the rewards and the downside in making business decisions.

While small business leaders risk in starting their enterprise they usually become conservative in their subsequent actions.

According to Tom Panaggi, sometimes this is not a good thing.

He argues “risk avoiders are also opportunity missers.”

“When you’re in charge of running a company, it’s easy to convince yourself that playing it safe is the responsible choice,” he acknowledges

“Especially if your business is new, going out on a limb is the last thing you want to do. But risk is needed if you want to do more than just scrape by—and it may be needed just to survive in this economy,”

 “Hoping that sales will get better or that conditions will improve is the wimp’s approach,” he adds. “You can’t wait for everything to be perfect because it never will be. You have to take action—in other words, accept risk and make those things happen.”

Panaggio identifies the 10 most common forms of risk avoidance:

Excuse # 1: “The timing isn’t right.” Business plans sit in boxes or on hard drives as their creators wait for the right conditions: funding, free time, better economic conditions. And plenty of existing businesses remain less successful than their owners would like because those very same owners are hoping that tomorrow conditions will be just a little bit better for advancing their goals.

Excuse # 2: “I tried that once, and it didn’t work.” According to Panaggio, those words are most often uttered by small business owners in reference to marketing. But without proactive long-term and consistent marketing, businesses die. Avoiding investing in marketing—or even cutting back on it—because one campaign didn’t produce the desired results is a risk small business leaders can’t afford to take.”

Excuse # 3: “If I just had XYZ gadget…” When you’re an entrepreneur, there are a million “If I just had…”s, and often, they center around technology. Remember, though, you can spend forever waiting on the next best thing—and often, says Panaggio, that “next best thing” isn’t as necessary as you thought.

Excuse # 4: “I’m still working on the plan.” The fact is, with planning as a comfort zone, you can easily replace the reality of execution with theoretical forecasting and ‘what-if’ modeling. For that reason, many risk-averse entrepreneurs miss opportunities and fail to build actual businesses in the act of building virtual businesses. Don’t make that mistake.”

Excuse # 5: “It’s a good idea, but circumstances have changed.” “Basically, moving the target changes the objective, goal, or focus of your business and thus delays plan execution, innovation, or change,” explains Panaggio. “In other words, it means changing your plans every time you lack certainty or just don’t have enough motivation to move forward. The problem is, each time you move the target you have to stop and prepare to fire again. It’s possible to spend an indefinite amount of time making excuses in this way without ever accomplishing anything.”

Excuse # 6: “I’ll get to it eventually.” There’s no shortage of delaying tactics that can be used as a buffer between you and risk. As an entrepreneur, you have to stop telling yourself the lie that you’ll ‘get to it eventually.’ If you immerse yourself in busywork in order to avoid the true priorities, your business won’t last long enough for you to tackle them at some undefined point down the road.”

Excuse # 7: “I’m playing a defensive game.” The hardest risks for cash-strapped entrepreneurs to take are often financial. Many business owners choose to cut costs and (at least attempt to) do more with less when what they really need is to hire new talent, invest more heavily in marketing, upgrade their machinery, or something else.

Excuse # 8: “Nothing’s broken; why fix it?” Customers don’t always leave because they had a bad experience with your company…the reason is often that they simply had a better one with someone else. Remember, risks need to be taken when business is good and bad if you want to stay cutting-edge and competitive.”

Excuse # 9: “…<crickets chirping, dust falling, grass growing>…” That’s the sound of silence. You know, what you hear when you decide to let a project or initiative die over time instead of doing what’s necessary to bring it to fruition. Whether you simply lack motivation or your surrender is fear-driven, your risk-avoidance behavior may be taking the form of lack of follow-through.

Excuse # 10: “But I don’t avoid risk!” Panaggio warns that progress paralysis might still be affecting your company through the actions (or inaction) of your employees. If you as the owner don’t, well, take ownership of your team’s counterproductive behaviors, you could miss out on a lot of opportunities.

“Risk avoiders live in a false reality,” Panaggio concludes. “The temporary comfort you gain from rationalizing your inaction just postpones the inevitable. Hoping that something will change will result in defeat, the end of your dream. Success comes only via constant forward progress, which requires making something happen. As a leader, your example of enthusiastically seeking opportunity to execute, improve, and deliver results will be the beacon that guides all who follow you. So stop avoiding—and start acting.”

Panaggio knows about risk firsthand. Along with several partners, he has created and built two successful companies: Direct Mail Express (which now employs over 400 people and is a leading direct marketing company) and Response Mail Express (which was eventually sold to an equity fund, Huron Capital Partners). As those companies have adapted to a shifting marketplace and an uncertain economy, Panaggio has had to take numerous leaps of faith.

“Even with the best attitude and plan, there are times in every business when, as progress slows, confusion sets in,” he explains. “You may feel frozen and afraid that any move you make will be wrong. However, if you don’t want to stagnate, you have to move. Unfortunately, this type of risk is the most difficult one to take. You’ll probably want to find ways to avoid action, which is tantamount to sinking your own ship.”

Tom Panaggio, author of the new book The Risk Advantage: Embracing the Entrepreneur’s Unexpected Edge (River Grove Books, 2013, ISBN: 978-1-938-41644-6, $14.95,

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