The other day I heard about a business person who exited a company to get hold of pension money to invest in a business. The basic premise would be to use the pension money to expand and grow the business. The business person is still young and able to recover if the business goes bust.
It reminded me of someone some time back who was fired from his director position with a large company. The way the company went about firing him was disgusting but let’s not get into that here. The business person decided to go into an industry where he thought he knew what was involved. So he invested his pension money and extended his home bond for the capital requirements of this new business. Within less than two years, the business went bust. Costs were underestimated and demand for product was overestimated. Plus a competitor, much larger, entered the market with big resources, making the small manufacturing business unviable.
The personal damage was devastating. The business person had to watch as the bank took his house, leaving him and his family with nothing. The family with four children moved into the wife’s mother’s townhouse and lived there for a number of years. Luckily the Catholic Church took care of the children’s schooling.
Now, several years later the man is owning and running a much smaller, niche business. This business which doesn’t require higher overhead or big resources for raw materials and stock is much more manageable compared to the previous industry that attracted bigger businesses.
Everything we do in life as risk. A new job as risk. Buying a home may have risk – structural defects, a neighbourhood that decays without warning signs. Health – no one has guaranteed health; you just have to try to be live as healthy as you can and hope for the best.
But risk which is inherent in everything should not deter anyone from venturing forth, trying out something new, expanding, growing. Yes, we will make mistakes or things will happen to us down the road but we have to do handle it. No one likes tough times in their lives but when you are confronted by problems, you have to face them and do your best.
Where would we be without our mistakes and failures? Self-correcting actions, learning through trial and error, getting the best advice we can, are all part of managing risk. Some risks can be avoided but some risks not, which means that we need to equip ourselves to better handle the bumps in the road ahead.