Business comes with risks. How have you overcome the fear of losing money in a business venture?
To help business leaders get more comfortable with strategic business risks, we asked business professionals and leaders this question for their insights. From trusting the numbers to diversifying your portfolio, there are several things that can help you to overcome the fear of losing money in business.
Here are 10 ways to overcome the fear of losing money in a business venture:
- Trust the Numbers
- Focus on Creating Value for Customers
- Diversify Your Portfolio
- Consider the Value of Your Business Upon Selling
- Conduct a Fear Setting Exercise
- Accept the Imperfections
- Allocate Insurance Coverage
- Learn from Successes and Failures of Others
- Set Clear Expectations
- Assume Financial Loss is Unavoidable
Trust the Numbers
An entrepreneur can quickly regain confidence and overcome fear of losing money by validating numbers in spreadsheets. A truthful cash flow forecast that details income, expenses, and addresses uncertainties can help an entrepreneur refocus on execution of a thoughtful plan. Rather than worrying about the what-ifs, a spreadsheet can help address the what-ifs with data-driven answers.
Brett Farmiloe, Markitors
Focus on Creating Value for Customers
Fear of losing money can kill the entrepreneurial spirit. Rather than focus on that fear, you should focus on creating value for your customers with your business. Sometimes, you have to spend money to make money, and you might not even see profits right away. Accept such outlays as part of the game, and see them as an investment in your business’s future. Working to create value for your customers will leave no room in your mindset for any fear of losing money.
Vicky Franko, Insura
Diversify Your Portfolio
Portfolio diversity is a critical way for you to protect your investments and mitigate risk exposure. Diversification is a smart way to reduce your exposure to a particular type of risk. Let’s assume, for instance, that you’ve only invested in stocks. If the stock market crashed, then you’d take a loss on all your investment earnings. But if you also invested in bonds and real estate, then those assets would still provide you with a cash flow despite your stock losses, and counterbalance any losses that you take. In addition, investing in multiple types of assets creates a greater chance that one of them may generate the lucrative returns that investors hope for.
Than Merrill, FortuneBuilders
Consider the Value of Your Business Upon Selling
I build online businesses, and each time I invest in new content, website design, and products, I like to remind myself that, at any given moment, I could sell the business and likely recoup AT LEAST the startup costs of the project. This helps to ease my anxiety when I foot the bill for each new venture.
Kristine Thorndyke, Test Prep Nerds
Conduct a Fear Setting Exercise
Fear setting is an exercise made famous by author Tim Ferriss. The purpose of fear setting is to define your fears related to a course of action, what you can do to limit your risk, and what you would do in the worst case scenario. The idea is that you make a three column table. In the first column, write down all of your fears and assign a 1-10 value if they come true (1 being a minor setback and 10 being catastrophic). In a second column, write down how you would prevent those fears from coming true. For instance, if you fear running out of money in your new venture, you could prevent that by saving up while working a job or freelancing on the side. In the third column, write how you would repair the situation in the event of your fear coming true. For instance, if you run out of money you can apply for jobs. By naming your fears, defining ways to prevent them from happening, and planning for the worst, you will be able to tackle your new venture with greater confidence.
Wesley Jacobs, Apollo Medical Travel LLC
Accept the Imperfections
You have to let go of perfectionism. This can be very difficult for entrepreneurs to embrace, but it’s also a crucial necessity. Things will go off the rails from time to time. Money will be lost, or less will be gained than expected at certain times. You have to let go and learn to be flexible. Of course, that’s an ongoing process, but it’s helpful to acknowledge it before you even become a business owner. Being in the right mindset will go a long way and put you ahead of the curve.
Nicholas Vasiliou, BioHealth Nutrition
Allocate Insurance Coverage
The best way to overcome your fears related to taking business risks is by getting adequate insurance coverage. Insurance is there to help manage financial risks. Depending on the type of business venture you are considering, the industry, location, and products or services, getting adequate coverage will help to mitigate the fear of losing money. As a dental laboratory company, while we could not foresee and plan for a pandemic, other normal business risks in our industry include consumer lawsuits such as malpractice, and employee safety and HR concerns. All these things and more can result in catastrophic losses without the right insurance coverage.
Henry Babicheknko, Stomadent
Learn from Successes and Failures of Others
Since the fear of losing money is really the fear of failure, learning from other business owners’ mistakes is one way to avoid having to even deal with the loss. Consider enrolling in courses and training to learn about others’ successes and failures. Find a trustworthy mentor who is experienced, successful, and willing to offer you help and advice. The key is to strategize on how to best protect yourself from financial loss and understand that you must experience failure on the road to success.
Desiree Medellin, Peels
Set Clear Expectations
When starting a business venture, a good way to overcome the fear of losing money is to have a clear set of expectations from the outset. Do as much research about the venture you’re starting and set up average profit and losses ahead of time. Rather than having wildly positive expectations that can easily be broken, starting with fairly realistic expectations can alleviate the stress of losing money.
Sacha Ferrandi, Source Capital
Assume Financial Loss is Unavoidable
Rather than being concerned with losing money, I make the assumption that a financial loss may be unavoidable at the beginning. That kind of risk is just a part of running a business or starting a new venture. You can’t avoid it when you make a bet on a new idea; sometimes you win, sometimes you lose. If I let that type of fear run my life or influence my business decisions, I probably won’t be able to get very far as an entrepreneur. We all take calculated risks when we set out on a new business venture.
Lily Yu, Oak Springs Realty