How much have you risked

Planning out long term business decisions there are a couple that will require substantial financial risk. Couple years out yet for planning and signing the dots but it is already pretty dam frightening.

Played it overly safe most my adult life but last couple years shedding some of that burden of super conservative decisions has really payed off, and the successes of that have tasted really good.

I’m always astounded by where others have come from and what they had to do to get to that point, because many of those stories have more failures in them than successes. Keeps a guy humble and on his toes!

Anyone care to share?

I have no stories I would share. However I would advise a good accountant and lawyer are important. IMO there are two kind of businesses. 1) the guy who wants to build a successful business through hard work and many, many repeat customers. 2) Those who are looking for the quick score and don’t care about repeat business and reputation.

If you dig into the history of some of the most successful people they all have something in common. They failed on their first attempts. But they learned and bounced back.

Set your moral compass and go get them.

Go big or go Home.

The higher the risk, the higher the reward.

A little over 5 years ago I decided to make a Major life change and Move and Buy a Business. I had several good friends who were in the insurance business as agency owners. They had been trying to get me to go into the insurance business for many year ( 20+ ). The thought of starting in that business from scratch was just far to scary for me to make the jump. The company that they both worked for made a change to their business model, and started allowing agency owners to sell their book of business when they decided to leave the industry. Rather than having to sell the business back to the company. The advantage of buying a book of business over starting from scratch is that you have a decent income source right from day 1. One of my buddies had heard of a Agency in Saint Cloud that was for sale due to a agent deciding to retire after 40 years. I had been wanting for several years to move out of the Metro area and back up more North. Saint Cloud was not as far north as I wanted to move and was still more Metro than I wanted, but it was a start in the right direction. After meeting with the Dist. manager and getting all the details, as well as consulting with my wife and Daughter, I decided to make the purchase of the Agency. I had to liquidate some assets and arrange for a business loan but was able to make it work. So here I am today as a 5 year agency owner. Like most business owners there are days where I think it was one of the best decisions I’ve made, and other where I’m not as sure. Like almost everything in life it takes a LOT of hard work to be successful as a business owner. Unlike when working for someone else, when you own your own business your income and time off is only limited to how hard you want to work.

Side Note. If anyone on here thinks that they would like to own their own insurance agency or become a agent from scratch, Feel free to contact me. I will be glad to answer any of your questions and put you in touch with the right people to discuss the option. From time to time there are Agencies available to purchase due to agents retiring or wanting out of the business for various other reasons.

When it comes to a business that produces your livelihood, I have always treated this situation like gambling: Don’t risk more than you can afford to lose. That doesn’t mean avoiding risk, that means taking smart risks and making sure they won’t sink you forever if the worst happens.

Fishthumper has a great example of taking a smart risk in a business he clearly understands.

Mrs. Grouse had the chance to accept equity in a company she worked for in lieu of a significant portion of her salary. We talked a lot about this because it was a large chunk of income that we would be risking, but there was also the potential for a reward if the business continued to grow as it had and the owner executed his plan to sell to a much larger competitor. For us, the deciding factor was what if the worst happens and we lose her equity? The answer was it would have been a really bad deal and would hurt really bad, but financially we could get by and recover. We weren’t going to lose our house or end up bankrupt, so we went for it.

The worst situations I’ve seen in business was when people risked money getting into businesses that they didn’t understand and that were controlled by other people. Even worse was when people did this and risked money they couldn’t afford to lose in the first place.

But whatever you do, do not get into crazy stuff like crypto, Zimbabwean gold futures, or hardwood flooring.

Grouse

Well, a brief summary, moved to Minnesota in 1976, Bought the company I worked for and actually had $10,000 to put down at the age of 34. Grew the company 25X then sold in 2018. Biggest thing is to pay attention to your customers as they are the biggest risk, losing them. The second most important asset was a company called ITR Economics (https://www.itreconomics.com/) as their economic forecasting is excellent. Another helpful asset is belonging to a trade group of your peers. As president of our National Trade Association our members included my competitors and trade vendors. I used to laugh when I tried recruiting new members, they would say why would I join a group with my competitors. I tell them that the biggest competitor is themselves as if you fail in quality, delivery, and customer service you can lose those customers. As stated, your biggest risk is not listening to your customers, the loyalty these days is very strong as it is very expensive to change vendors. I don’t know what business you are getting into but they all have the same common denominator, customers. It’s easy to throw out sayings, its a lot different to make a payroll.

I’ll share that my biggest mistakes are the deals I didn’t do when my gut said I should and taking on bad business when I was regretting before I started. To a lessor degree, being a nice guy has a huge price tag.

After that I learned probably the biggest lesson, do NOT dwell on the past. Learn from it but don’t live in it. I missed out of over a quarter mil before I was out of high school. I missed out on another half mil before I moved out of my parents house. I missed out on another half mil in the first couple years I got married. Easy to dwell on what I could have done with that money when I was young.

Get past it and move on. I lost hundreds of thousands when the market crashed in 08. Was stuck with homes that owners defaulted on and I was way upside down.

People dislike negative and doubtful people. If your using any investors, don’t be that guy.
Find a mentor you know you can trust and TRUST them.

Cover your cost of living and don’t touch it. Everything else is what you can use to invest in your next venture. Your ventures that are self sustaining and grow is what you replicate. My favorite advice came from Judy Kellog- when unsure if your making enough, double your cost and add your time if anything else you do doesn’t exceed that, move on.

Forgot to include, surround yourself with the best in industry type people you can for anything you do. Accept their is always someone else smarter, more efficient, and harder working than you. By being around those people you will find that you raise your expectations on yourself and strive to do better

Kinda funny, but I’ll risk my life before I’ll risk my finances.

castle-rock-clown wrote:

Kinda funny, but I’ll risk my life before I’ll risk my finances.

Just remember, you were broke when you were born & will be broke after you die.

Dutchboy wrote:

<div class=”d4p-bbt-quote-title”>castle-rock-clown wrote:</div>
Kinda funny, but I’ll risk my life before I’ll risk my finances.

Just remember, you were broke when you were born & and will be broke after you die.

Exactly why I go out and live life!

There’s lots of jobs, careers, occupations out there. Some are higher risk than others. There are also different forms of risk. I chose a career that was extremely financially stable both for me and those that depend on me no matter what. I was a FireFighter. Others have chosen paths where mortality is never given a second thought. It takes all kinds to make this world go around. It’s just that circumstances can make different people view priorities differently.

I was always told any good business plan has a exit strategy to.

I’m not a businessman nor pretend to be. I try to minimize risks. Risks to me in a career are something that comes about when you must rely on other people or things outside your control. I’ll bet on myself all day. To me, that’s not a risk though. I know what I am and am not capable of within the constraints and makeup of my life (family has to always be first or it will all fall apart).

My main career job is a constant. I know exactly what I will earn, when I will earn it, and right down to the penny what will go into my savings, Roth, retirement account, etc each month. Where I branch out more is in my side work. I still wouldn’t consider it taking risks, rather managing opportunity costs. If I want more income, I take on more. If my family requires more time, I take on fewer side gigs. The people I work with or for on the side are known commodities. As it was said above, I will only work alongside people who are masters of what they do. Odd finishing gigs or lumberyard hours are generally gravy money when working with the right people. The biggest true “risks” I take are dabbling a bit in stocks and cryptocurrency from time to time.

With a wife, daughter, and another little one on the way…many of my risk taking days are behind me. I’m sure I’ve missed out on career opportunities, but I wouldn’t change many life decisions I’ve made. If I was single with no kids I’d definitely look at risks differently and would advise those who are to do so as well. People rely on me, and getting older and more boring by the day is something they will all thank me for someday.

I burst out laughed at that one liner Grouse, well played

All excellent info, advice and points laid out here. Appreciate everyone’s thoughts.

Too many things lining up just right for years now, virus, riots, and every other negative in the last couple years actually only made things better for the new venture. Hard to imagine, but to not to goes back to Randy’s first thought, regret. Be an interesting next couple years.

I got this for ya, Beads.

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