Be A Smart Risk Taker (written March, 2010)
In general people think of entrepreneurs as “risk takers.” Other people that is. Ask a real entrepreneur about risks and they’ll tell you something quite different. Lillian Vernon, who started her highly successful mail order business with a $2,000 investment and a $495 magazine ad, wrote: “I don’t believe they ever think of risks. Instead they have confidence in their ideas and decisions.” What is she saying? A smart risk taker has looked at the odds and knows the chances for winning are good. They don’t like throwing money away. Follow these simple rules and you won’t either.
Rule #1 – Do something you know and understand. If you haven’t decided what business to go into, first consider your experience and interests. What things have you observed well enough to believe you could do them well? If you’re going to make or manufacture something, be sure you know how to do it. This might mean working in the field or apprenticing yourself to someone with more experience. Or it might mean taking a course from correspondence school. Also read all the literature you can find on the subject. Whatever you do, don’t plunge into something totally alien without investigating it and asking a lot of questions. As time goes on, keep adding to your store of knowledge through networking and reading. Successful people never tire of learning more about the field they’ve chosen. If you have chosen MLM as your chosen business, then make the commitment to learning something new about this industry daily!
Rule #2 – Know who your customers are. If your product is an item of women’s clothing or accessories, you need to place that product where women will see it. If it’s something for kids, you need to put it in front of the parents and grandparents, as well as the kids themselves. Pick the right flea market booth, the right store to display the item or the right publications for your advertisement. In MLM, you want to promote to MLMer’s – right? You can be even more specific. Know the approximate age of your customer as well as some of their specific interests: hobbies, sports, favorite music, and pastimes. Above all, know what makes that person buy or join into your program! Big companies conduct expensive research projects. If you are small, and don’t have a big budget, then you can make a list of questions and ask them whenever you have contact with a customer or a prospect. Once you know personal details about your customer or prospect, you know how to approach that person and make the right pitch. The more you know, the better chance of a successful promotion. As time goes on, you can find more products or services to offer these customers who know and trust you. It’s easier – and less costly – to sell more items to the same people than to go looking for new customers. Much easier!
Rule #3 – Calculate your break-even point. You need a calculator or paper and pencil. What is the cost of the flea market or store space? Of the mail order ad or flyer? How often will this cost come due? What other costs might there be? Add up how much money will be going out, and then figure how much you need to have coming in and how many items you will have to sell. Some perfectly good ideas fail because they weren’t priced right. People who don’t have confidence in what they’re selling may set a price too low. It looks as though they’re making money until they add up how much is earmarked for raw materials, ad expenses and other things that must be paid for. Smart risk takers always keep their overhead and expenses at a minimum even if it means working long hours and putting up with many inconveniences. They never forget that people, rich and poor, love a bargain. Your product or MLM service should have a popular price that will appeal to people but at the same time should allow for your expenses.
Rule #4 – Be ready to cut your losses. If your first idea doesn’t pay off, pull back and try something new instead. Successful people know when they aren’t succeeding, and most have had more than one business idea before something really took off. Chances are you have other ideas that could be winners. (Don’t close your mind to new ideas just because you’ve decided to run with another one of them.) Successful people are committed to their ideas, not married to them. There’s a difference. What drives them is not obsession with an idea, which can cause people to pursue something that isn’t practical or feasible and to take foolhardy risks. What others have is a determination to succeed. That determination brings about a combination of caution and boldness, which goes a long way in accounting for success. Trying other methods is important!
Use these simple rules and you will be increasing your chances of success. Don’t forget – a smart risk taker has looked at the odds and knows the chances for winning are good. Become a smart risk taker today!
The author of this article is Larry Costello, President of All-American Print & Mail, 2200 Wilson Blvd #102-57, Arlington, VA 22201.