Understanding and managing business risk is more caught than taught. It would be nice to read a book or apply a formula for risk, but experience may the best teacher. By Gary Shotton #000350
By Gary Shotton
(May still need some editing, as I did a quick job on it. Gary)
Hello, I’m Gary Shotton and I’m here as a part of Inspiring Better Business. I have been talking this several times in business. We have one problem, we are faced with particular problems in life. This is the problem I would address today when there’s a decision to make, a major decision there. Probably is some risk and we’re going to talk about risk management. How do I manage that risk and hopefully come through life learning how to manage risk in a good way? Well first we do have a lot of choices but again there’s only a few big choices that we face. I’m going to carry some of those and explain them later, but in summary I had to decide as a Christian whether to give up my good job and move 1,200 miles away to go to Bible School, there’s some risk that’s a problem.
I had to decide after 17 years of owning a business whether I should sell that business, My first business that’s a problem there’s some risk six years later. I had decided to buy a business ,I’ll explain more about that .So each one of these times there’s some risk of failure I think it’s well said by one individual that, there are difference between risk and risky you could imagine that ,you’re driving down the road with your hands on the wheel and I’ll just give my example of driving in Dallas traffic at 7:30 in the morning . Three lanes, four lanes on my side that would be a six Lane, eight-lane. Highway and this were quite a few years ago and I have my radio turned off nobody’s talking to me my hands gripped to the steering wheel. I’m managing this as agreeable risk now other people were more comfortable, but I was in a risk but I looked to my left and here’s an individual riding a motorcycle now we’re going about 65 70 miles an hour and I guess he didn’t think it was risky enough. So he pops at 65 to 70 miles an hour he just accelerates and takes this motorcycle to only one wheel and goes for about a quarter of a mile and drops it down goes a little, while again I guess he was bored he kicked it again and went to one wheel and I said you know that guy is risky , I’m just holding my own in this lanes of traffic. He’s at risk, I’m at risk he’s at risky so we’re going to talk about some things, you might do when you’re facing these big decisions, and these are just suggestions.
Number one get the facts you know a lot of times we’re pushed into something without knowing all the facts and dig deep research to get the facts on, and when you’re getting the facts make sure they’re from reliable sources not just other people’s opinion. What do I mean? I had somebody that was considering selling a house that they had and it needed a lot of repair and they got several people to say , it’s worth this amount of money, but I said we know where they willing to buy it for that .They wouldn’t buy it for that . Then that’s not really a fair price because the fact is, they’re just giving your opinion. They’re not in the market they don’t know anything about that, but they’re making you feel good. So, get the facts from reliable sources that you have some confidence in. You have the ability if you don’t know under how, know how to understand and read your financial statements. You need to practice that and learn that anyway. You better learn small before you get big. Because that’s one of the factors in most business decisions.
Number two if this doesn’t work out what’s the alternative? what would happen? what would be my way out, how could I bail myself out? Because not everything’s guaranteed, I mean it’s not much of a risk. If it’s a slam-dunk, so it’s fair to ask what’s my alternatives? If this doesn’t work out.
Number three maybe you should delay the decision if possible. I had a situation where I had a deadline. It was Friday afternoon at five o’clock I didn’t feel comfortable it was a major decision I said. You know I’ll lose that contract. I am not making an agreement at that point. If it’s there on Monday. If will not there on Monday I’m okay. Because I’m not pushed into deciding until I’m ready.
Now there’s also a hypothetical story. Here that goes like this a reporter was interviewing a very successful individual and as most successful. Individuals are there they didn’t talk a lot, so the reporter was very flustered, and a little bit perturbed me. Because he kept asking these questions in the individual with wealth just would not get any answers and finally, He said tell me how you became so successful and the accessible rich man. Said “good choices”, this reporter was so frustrated what do you mean? two words good choices and then he said the reporter asked how do you make good choices A successful man said, “bad choices” that’s pretty , That sums it up you know “less is more” and you learn a lot by the mistakes you make and just don’t make such.
A big mistake that you’re going to build regret it now on delaying the decisions ,don’t wait too long ,if you’ve done your research and you know what’s right, If you stall beyond a point and it was a good deal somebody else ,was going to take it. I don’t know how many times I said I knew about that I saw that six weeks ago, six months ago. I should have investigated that and then I’ll see somebody else. Did very similar what I was wanting to do. It’s okay there’s another chance now on the spiritual side. Here’s where the spirit the Holy Spirit the Spirit of God could come and help you, know we’re not calling upon this, Here to God to direct me on what shirt to wear and what shoes to wear.
I mean there’s a lot of life that’s just your choice and where we want the Spirit of God to come into the picture, when we have these risky or potentially risk tolerance kind of risk management questions, should I do this? Because this could make a long-lasting effect on me. My family and so it’s fair to say that you want to do your research one person did it this set it this way if you combine the natural plus the supernatural .You have the potential for a great power like an explosion natural press supernatural makes the difference. Let me give three quick examples, in my life I alluded to them I had my first job out of college ,I’m a young guy I worked nine and a half years I have a good paycheck ,I have a company vehicle and yet I could see that at the end of life, I really didn’t want to expend the entire life working for a large world company. I could see some personal pitfalls it wasn’t for me but I had a risk, I had a choice to give up this job actually I asked for and received what would be called a leave of absence to move 1,200 miles away ,for a year to attend Bible School and for me that was a calculated risk for someone else they’d say that’s totally stupid that’s risky Because I had three small children I had no guarantee of income I had a tuition to pay at the school. I was not calling upon my parents to support me I had rent house to pay, I had a lot of things facing me but for me it was the right.
Risk number two after Bible school at the end the second year I had already started moving people .That’s furniture using the small trucks and I decided this would be a good avenue to travel even though it was hard work to enter into my first business a moving and storage trucks furniture employees that kind of thing well after 17 years were kind of settled in it wasn’t a bundle of joy every day. I’ll tell you it was tough by the way the tougher. It is the more you’ll learn but I had a risk then of deciding to sell that and decide what I would do next with no notable income except real income from a property.
My last one and I know there was more coming at age 55 I had felt the Lord leading for me to buy a rather large company with 41 employees this by most people would consider risky. But I settled in on it over a long period of time studied got my facts got the information gained peace with the Spirit of God leading me. With virtually no money down almost literally 100% of the money borrowed money I bought a two and three-quarter million dollar project with 41 employees and I’d never been in a machine shop that’s the business I purchased but the one I’ve been in one time because I knew the business side not the technical side most people say that was very risky for me that was risk managed risk . I believe that you’ll end and go down the path of life happy my one friend said one of the repeatable things he noticed as he interviewed older people many felt and regret when they were younger in life they had not taken more risk I hope these are helpful blessings to you.
Thanks for being a part of Inspiring Better Business.
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