I want to talk about a concept that my partner and I, Julie, we talk a lot about in the Thriveal incubator, and it’s called risk versus reward analysis. And basically, if you want to grow a firm, if you want to grow any company, risk is part of it. You got to take risks. You got to go do something about the future. You got to make decisions about the future that you don’t know yet are going to work out, or you don’t know if your plans are going to work out.
So a risk versus reward analysis is looking at all the pros and cons, really assessing the percentage, and the likelihoods of things working out versus them not working out as you relate to the cash that you’re spending to make the risk if it is a cash expenditure that you’re making. And they’re pretty complicated. I think what a lot of people think is entrepreneurs, firm entrepreneurs, are they’re crazy. They’re risk takers, right? So they go do dumb stuff and that’s not what you’re supposed to do when you’re growing a firm. You are supposed to take risks, so maybe you are a little crazy, but you are supposed to assess the value of the risk and all the components in which it’s going to affect.
So for example, if you’re a solo firm owner, it’s only going to affect you. So your risk analysis doesn’t have to be as deep. If you are an owner with a partner, or you have multiple team, your risks are much greater. The risks you take will hurt people. If you have just a few clients, five clients, the risks you take will only disrupt their service and process possibly, but if you have 100 clients, the risks are higher that you’re going to disrupt more people, and you’re going to deal with more backlash from the thing you did in the risk.
So for right now, our team is 13 people. We’re analyzing a risk right now. It’s a change in a big, bulky foundational product that we use. The whole team uses it. And we’re assessing whether we should switch to another one, and it would be disruptive. It would be really big and so we’ve got to go super slow. And we actually have a team member, we’re getting to go through a huge, big analysis. We could just pull the trigger. We could say, “That’s great.” Actually, the analysis is going to save us a lot of money. So we’re doing this analysis. We could just pull the trigger and go, “Boom, save money”, but the risk has a lot of far reaching implications to team and clients and processes and so we have to slow down and take those risks.
So, I just want to tell you about risk versus reward analysis and how important they are. So just a couple things to learn from that. If you want to go… If you want to grow, you have to take risks. Taking risks is not crazy sharp shooters, bam, just pulling triggers. That’s not what risk is. It is doing analysis and assessment and you’re always analyzing the context within which you’re about to take these risks. More clients, more team, more complex services, growing fast, all of these things add to the complexity and the disruption that some change, like a risk versus reward, may take on you. So just keep that in mind when you’re making those risk versus reward analysis.
And I’ll add number four, when you do risk versus reward analysis, put it on sticky paper with markers. That is a key. Stand up, be against a wall and write something down. Write a column, risk, reward. Start writing stuff in those columns. Doing these things in your mind is not a good idea. You want to get it on paper, get it out so other people can see it and review it and they can ask why you wrote it. Do risk versus reward with another human is better too, if you can do that. Do it with your coach, whatever. And that’s why we have things in Thriveal like one-on-one coaching. We have coaches that can help you work through those kinds of things in your firm. So let us know if we can help you. We would love to.
So I hope that helps know what is risk versus reward analysis as you build your firm. Let us know at [email protected] if we can help you grow your firm. Thanks. See you.