David V. Lorenzo's Blog is now: www.careerintensity.com/blog

Risky Business – Making Tough Decisions

The type of risk that most people and most businesses face each day is the risk involved in making decisions. This is referred to as speculative risk because the possibility exists that the outcome could be either favorable or unfavorable. The risk taker is speculating on the potential result of the decision. Successful individuals win these situations most of the time; the outcome is favorable more often than not. In order to win they use a four-step process to aggressively evaluate each opportunity.

Assess and eliminate the risk of doing nothing. You may often sit back and wait for others to take the lead in a situation that contains an element of risk. Occasionally, the appropriate decision for a given set of circumstances is to take no action whatsoever. A top achiever is excellent at assessing whether or not action is warranted in a certain situation. She works to immediately quantify a situation and determine if doing nothing is a viable option. If it is not, she rules it out instantly. She does this even if she does not yet know what the appropriate course of action may be. She views the first step in the process of making a risky decision as deciding whether doing nothing could be an option.

List the proactive steps that could positively influence the outcome. For a successful individual, the next step in evaluating risk is to list all of the potential actions that could be taken immediately to reduce the risk of the decision. What information could he gather? How much information would he need? Who are his resources? What can he do right now to get up to speed on the situation? He lists the answers and enlists people to help in gathering the necessary information.

Live the Triple A rule - Always Avoid Assumptions. Assumptions have been the cause of more than one bad decision. A top performer does not take risks unless she has built a fact-based foundation for her decision. This intense individual always avoids assumptions – particularly when dealing with risk.

Play the odds. When making a decision, a successful individual always tries to understand the odds involved in his choice. He looks at the probability of a favorable outcome vs. an unfavorable outcome. Is there anything that can be done to increase the likelihood that the outcome will be favorable? Can he take steps to minimize the chance of unfavorable events? He only takes risks when the odds are in his favor.

Business Name Mistakes

Dane points us to a post at Business Know-How about business naming mistakes.

A good name is critical to the success a business on the web.  You have to select a name that will stand out and is memorable.

Here are Business Know-How’s six mistakes to avoid:

1.      Getting stuck in alphabet soup

2.      Using names that are too long, or difficult to understand, spell or pronounce

3.      Picking business names that limit business growth

4.      Letting the grey areas get you discouraged or immobilized

5.      Being an island

6.      Failing to check if your chosen business names belong to another business

I would add one more to this list:

Failure to checkout what the name means in other languages.  We’ve all heard the stories like the one about the Chevy Nova.  In Spanish Nova means “Does not go”.  That’s not good if you want to sell cars to the 55% of the population that speaks / understands Spanish.

Naming your business is a tough task and you only get one chance to get it right. 

Your Competition is Everywhere

Marketing Comet has a good post on competition.  Your new small business may not have any direct competition (people who do exactly what you do and tap into your pool of potential customers) but it may have indirect competition.

Here’s the money quote from the Comet:

“Your real competition consists of all the other likely choices that your customers can make. One of those choices is nothing at all. I may really need an oil change, but decide it's too much trouble or too expensive. I may be hungry and yet decide not to eat.”

This is something that small business owners often overlook – at their own peril.

How RSS Can Make Your Life Better

RSS – Really Simple Syndication - can help make your experience with the information you process much easier.  Steve Rubel has a post that lists ten ways to use RSS. It’s a must read.

In case you are wondering how to use RSS – check out this post from April.  It gives you a pretty good overview of how to get started. 

The Corporate Veil

Smart Money Daily has an interesting post on structuring your company as a corporation.  Among the issues that Jon covers in his post is the issue of piercing the corporate veil. 

This is an important issue if you are thinking of structuring you company as a corporation.  Keeping your business and personal expenses separate can be challenging for many entrepreneurs and this is the fastest way to lose the protection of your corporation. 

The bottom line is: Do your research thoroughly before deciding how to structure your new venture and then engage a good attorney and an accountant.

Eight Questions

Business Week has an eight question quiz that can help you focus on your entrepreneurial desires.  While it is certainly not an absolute indication of success, this quiz will give you a few (well, eight) things to think about as you go out on your own.

100 Ways to be a Better Entrepreneur

That’s the title of an article at entrepreneur.com.  It offers some great tips on ways to revitalize your efforts to go it on your own. 

Thanks to Ken for pointing us to the article. 

Planning Your Escape

Mary Sullivan points us to a CNN Money article on what to do when you are planning to go solo while you work for someone else.  The seven tips are:

1. Scour your finances.

You want to be certain you will be attractive to future lenders and investors, so now's the time to pay down credit-card debt and shore up your credit rating. Once you're on your own and no longer drawing a salary, banks or investors will scrutinize your numbers more closely.

2. Wring the most out of your current employer.

Hidden in many corporate benefits packages are valuable perks that can help you reach your goals. Think workshops, training, networking forums and tuition reimbursement.

3. Hitch your wagon to another star.

Finding an enthusiastic mentor can be difficult. But many people never find one because they never bother to ask. Choose experienced people you admire and ask them to show you the ropes or make themselves available for questions or feedback.

4. Go out with style.

Stay committed to the task at hand while you're on the job. Not only is it the right thing to do, but it's particularly smart if you expect to do business with the same company or in the same industry. Ideally, you'll find your first customers where people already know you.

5. Line up a support team.

The day-to-day aspects of running a fledgling enterprise are commonly overlooked by new business owners. As a solo player, everything from billing and bookkeeping to taxes and legal concerns is now your problem.

6. Give yourself away...

Building a client base? Consider freebies, discounts and barter to pad your portfolio with evidence of your ability -- especially while you're still earning a paycheck.

In addition to providing material for marketing yourself, it can also be a way to build a paying client base from scratch. See the next step.

7. ...and then get paid what you're worth.

Learning to value yourself in the marketplace is a tough skill to master.

Start by talking to other people in your industry -- providers and customers. What's the going rate? Are there new services or trends? Are certain skills and credentials more valuable than others?

Read the entire article by clicking here.

Ideas are Great but Execution is Better

Business Pundit has a great post about why execution matters.  You can have a hundred great ideas but it takes flawless execution to make a great idea a productive reality.

Are You Ready to be an Entrepreneur?

The Millionaire Blog has some questions that can help you decide if you’re ready to make the move to go out on your own.  Here are some highlights:

• How well do you get along with different personalities?
• How good are you at making decisions?
• Do you have the physical and emotional stamina to run a business?
• How well do you plan and organize?
• Is your drive strong enough?

Theses questions are a great starting point.  You also have to take into account your risk tolerance and your feelings about success. 

Risk tolerance is something that naturally varies from individual to individual.  Some people are more risk averse than others.  Experience and knowledge can increase your confidence and help make it easier for you to face the risks necessary to start your own business but ultimately you need to be comfortable working “without a net”. 

You attitude toward success is key point that is often overlooked.  On some subconscious level people often feel that they are not ready for or don’t deserve success. This can often lead to unintentional self-sabotage.  This is a deep psychological issue that can often be routed in alack of self esteem. May people who sabotage themselves feel as though others will perceive them as unworthy of success.

To address these two areas I would add the following questions:

• Would you risk your life’s savings if there was a 60% chance that you could triple it in five years and a 40% chance that you could lose it all?

• Imagine that you have achieved all of your goals.  You are receiving recognition on a national television show.  Are your friends happy for you or are they jealous? If they are jealous – how does that affect your behavior?

You need to ask yourself all of these questions and answer all of them honestly.  The value comes from the self awareness they generate.  In business you must know and understand what makes your employees tick this starts with employee number one – you.