Transcript: Do you ever consider risk versus reward assessments? That’s a strategy and a skill that firm owners have to adopt. They have to figure out if they’re growing a services based company, they have to do risk versus reward. And a lot of firm entrepreneurs actually operate their business on their gut. They just like make gut calls about things to do in the future. And that works for a little while, but when you get bigger and you have more people and you have more clients and there’s more things to care for, your growth has to become more methodical. It has to become more strategic and strategic just means intentional about the future. And so a risk versus reward is something you do when you’re considering something big. We were coaching with somebody not long ago about adding a partner and that’s a risk versus reward assessment you do. And you don’t just add a partner. You have to think a lot about the implications of that.
So let’s just define a risk real quick, and we’ve kind of talked a lot about risks on videos before. But a risk is basically committing some money or time or resources right now in the present for some hope of a future outcome. Typically, some return on the future and that return could be more time, more money, more growth, more clients, whatever it is you’re trying to make a current bet is what you’re doing. A risk is a bet on the future. And so you can’t make poor bets and keep failing and actually grow. It’s going to hurt you. So you have to become more methodical when your bets become bigger. And your bets, by definition become bigger, when you have more people that are relying on you, and there’s a lot more that can go wrong.
So what you have to do is go, all right, I used to make decisions and make risk calls just with my gut when I was a smaller firm. But now that I’m bigger, you don’t get to do that anymore. You don’t have the freedom to do it. So you have to prepare some data. That’s what you need. And then you go through a process of assessment from that data, which is a lot of sticky pad paper. It’s talking about the pros and cons. What happens if we do, do it? And assigning probability percentages to what if it doesn’t work? What’s the probability that this won’t work? 60%? 30%? 90%? Those things are part of it. And then you have to assess the third step. Do you want what that means? So what if it does work? Or what if it doesn’t work? Do you want what it means to either succeed or fail in that risk you’re trying to take? And then the fourth phase is to make a commitment. Do it. You have to expend resources, expend time, move forward.
And sometimes you can do this assessment, risk versus reward assessment. You can do it pretty quickly, but at first it takes time to learn this methodology. And it’s so intentional. We have a whole module that my partner and I teach in our Thriveal Incubator Series. It’s such an important thing to help you grow your firm and we just wanted to throw that out there. If you need help, hit us up at [email protected], and we’ll be glad to help you figure out if that assessment is right for you. Take care.