I’ve never been the type of person to be afraid of taking a risk. I’ll admit though, most of the risks I take are calculated risks of which I’m fairly certain I can achieve. For example, I’ve started three businesses in my lifetime: a printing/advertising brokerage called “Studio Graphics”, an online printing source for large digitally printed banners called “BigFatBanner.com,” and my current real estate business of Ron Henderson & Associates, Inc.
Studio Graphics and BigFatBanner.com were both profitable during the years of 2000-2004, but changes in technology caused me to rethink the viability of these two businesses and eventually shut them down. Having said that, I think the average person would be too nervous to even start a business in the first place. One of my friends once asked me, “So do you get paid a salary in real estate?” I told him, “No, I’m 100% commission sales. If I don’t sell a home, I don’t get a paycheck.” He looked me straight in the eye and said, “I could never do that. What happens if you don’t make any sales?” I laughed and said, “That’s not an option Mark.” What I didn’t tell Mark was that being confined to making the same, exact paycheck every single month would scare me to death. I need the ability to work in an environment where there is no ceiling. That mindset and environment comes with risk, but I have enough confidence in my abilities to make it happen, so I guess in my mind, that’s a calculated risk.
When I first hired Elizabeth Gilbert, she started out as my personal assistant. Now she runs the administration and marketing side of my business as the Chief Operations Officer. She’s very good at what she does, but Elizabeth is not personally comfortable with my level of risk. She likes to know exactly where she’s going and what she’s doing at all times. I used to say to her, “Well if this doesn’t work out, I’ll just back up and punt.” One time she asked me, “What does that mean exactly?” I told her, “This business is like football. I start at the line and push forward, moving the ball towards to the goal. If I don’t move it forward fast enough or I get pulled backward, I have no problem punting the ball away. One way or another, I’m going to get that ball downfield.”
My wife is not comfortable with risk either. When we first started dating 22 years ago, I had a “real job” that included a steady paycheck. By the time we got married a year or so later, I’d already made the switch to 100% commission sales and she’s always been a little uneasy since then. She believes in me, but if you asked her today, she would probably tell you she wishes I got paid a steady paycheck twice per month. When faced with risk, I often say to her, “What’s the worst thing that could happen?” This is never a good thing to say to Elaine because she will almost always begin to spout off a dozen or so things that could go wrong, many of which will usually be ridiculous things that are extreme possibilities. I, on the other hand, don’t think like that. I’m willing to take a chance that I might fail.
One of my favorite quotes is from Robert F. Kennedy, “Only those who dare to fail greatly can ever achieve greatly.” So many people want to win the lottery or have someone hand them something. I would honestly rather make a million dollars myself, then win it in the lottery. It wouldn’t mean as much to me. If I built a business and made a million dollars, then I can truly enjoy the fruits of my labor and say, “Yes, I did that. It was challenging, but I made it happen. I succeeded!”
I’ve read a few books on this subject of risk and it’s almost always associated with fear. People are typically fearful of risk because of four things: 1) not being good enough, 2) fear of failure, 3) being overwhelmed, and 4) fear of the unknown. Ask any successful person and they’ll tell you these things just are not in their vocabulary. Yes, they struggle to some degree with each of these things, but they don’t let fear or risk get in the way of their success.
Large Fortune 500 companies spend millions of dollars to employ people in charge of identifying, assessing, and controlling threats to an organization’s capital and earnings. I guess it’s the basic fear of risk that has spawned so many large universities to offer degrees in risk management. According to http://www.payscale.com the average pay for a Risk Manager is $83,763 per year. Not too shabby.
When my wife and I sat down with a financial advisor last year, he had us take a “risk assessment test” to determine our risk tolerance. My wife was actually surprised to find that she has a medium risk tolerance when she thought she probably had a very low tolerance to risk. We both knew mine would be high, but I thought it was funny how this small piece of information made her think differently about herself. She felt OK with choosing some higher risk investments and she said it even made her feel good about herself. When we got in the car to leave, I asked her if she was ready to go skydiving. She looked at me and said, “You’re not fooling me. I know you wouldn’t do it!”