Many successful people in business are prepared to take risks, which is why they get ahead of the game. I admire some who have take calculated risks to be a huge success. I guess Richard Branson would be one example of someone who stuck his neck out. Very often he has taken risks with finance and burrowing. Sometimes he has come to grief, but has had enough to fall back on. With the huge empire and brand he has, you have to admire his courage.
Sir Richard has always shown a certain prudence, though. He has never obviously put all his business interests at risk.
When I am out for my evening walks, especially on Friday and Saturday evenings, I have to take added risks in crossing the roads because of the boy racers; those driving at excessive speeds over the limit. They don’t worry about the statistics. The adrenalin takes control and they take risks. So many more come to grief in the age group 17 to 24 than in any other age profile.
There do seem to be people who are the equivalent of those drivers in running their businesses. They take excessive risks. They do not consider the consequences of their actions down the line. They try to expand too fast, and they borrow money in order to do so.
Nowadays the banks appear reluctant to lend too much, and are very risk averse, yet somehow they allow businesses to borrow through credit cards at very high rates interest, with APRs well over 20% when in the UK our bank base rate is still only one-half of one per cent. At a certain point the high interest takes its toll in terms of cash flow, or absurdly in some cases, they make a decent profit and borrow so much against their success that they cannot pay their tax. And so the walls of the business come tumbling down either because the banks / credit card companies or indeed the tax authorities want their money, but the business owners have spent it on more assets which are not readily convertible back into cash.
As usual it is all down to planning. If you fail to plan…
There is always a temptation to try to fulfil as many orders as possible no matter what. It is very easy to overstretch both in terms of resources and in terms of finance. If we have a resources problem only we can pull our horns in and manage what we are able to deliver. If we are over-committed on finance and borrowing we can lose everything by running too fast, and trying like Icarus to fly to high.
Do you know anyone who has flown too near the sun?
Here is a video with Janis Ian about running too fast.