Risk and Uncertainty

Taking risks and dealing with uncertainty is a big part of running a business.

But they’re not the same thing.

When Joe set up his picture framing business his biggest risk (so he thought) was competitors, so he figured out that by charging less and doing a better job he’d manage that one.

Then he found he was at risk of running out of money so put his prices up. Fortunately, he’d managed to build a great reputation so that worked out OK.

Charging higher prices attracted people who owned very expensive pictures as they saw this as a sign he could be trusted. Joe managed that extra risk by taking out more liability insurance.

Managing risk is more complicated for some businesses than others but it can generally be figured out.

Some people say they’re risk averse and try to play it safe while others thrive on it, calculating odds and trying to predict outcomes, pitting their wits against whatever comes their way.

 

Risks can usually be managed, uncertainty is uncontrollable and unpredictable.

Dealing with the level of uncertainty we find ourselves in right now in the middle of a world wide pandemic is something most people have never had to manage before.

No-one is aware of all the available alternative outcomes of any situation.

Joe found his supply chain for materials was severely interrupted. His staff couldn’t work from home so they were furloughed and he didn’t know when he would be able to re-open or when his customers would start coming back.

This is a lot harder to deal with – but it can also lead to all sorts of possibilities.

If we approach uncertainty with confidence and an expectation that things will turn out well we can harness the powerful feeling of anticipation.

If we approach it with anxiety we’re more likely to feel dejection, hopelessness, and despair.

There are three main things that make it easier to deal with uncertainty in an optimistic way:

  1. Goals – Having something to focus on, achieve and celebrate.
  2. Options – Finding different ways to achieve your goals.
  3. Agency – The power and ability to choose what action to take.

Joe was rattling around in his workshop all by himself so he got on a call with some other business owners and asked them to brainstorm some ideas for what he could do to save his business.

They realised that a lot of people were stuck at home with not much to do so Joe started making videos of how to make simple frames with basic tools and he put them on YouTube. He was fascinated by different framing styles and techniques so included some pictures and ideas of what styles complimented different sorts of pictures and how to hang them in groups.

Before long he was doing on-line workshops and when the supply chain issues eased up he started selling kits for people to use at home. It wasn’t something he’d ever thought about before but it worked.

Rosie, another member of the group, had had a wine tasting business, hiring a room in a local hotel for group events. When this business stopped overnight she started on-line tastings on Zoom, teaming up with cheese producers to make entertaining events for people stuck at home. She introduced video interviews with wine and cheese producers, using Google earth to show where the vineyards and cheese factories are located and doing virtual tours. This model proved to be more attractive and more profitable than the in-person events.

Both of these ideas gave Joe and Rosie a much wider audience than their previous local ones so their original loyal fans could recommend them further afield and help them grow their new style of business.

The power of a support group

Joe and Rosie might have come up with ideas for how to cope with the uncertainty they were facing on their own but having a trusted support group they could ask and get help from made things so much easier.

People who can establish clear goals, who have access to ideas about multiple workable ways to achieve those goals and persevere even when obstacles get in their way feel less anxious about dealing with uncertainty.

Agreeing goals with others and checking in on what’s working means adjustments can be made quickly as circumstances change and new things come to light. It all feels a lot less scary.

In uncertain times it’s even more important to set goals that are in your control to achieve.

  • Hoping ten people will sign up to your new thing isn’t a goal.
  • Calling ten people to ask them to sign up is in your control but the outcome depends on your sales skills.
  • Calling as many people as you can until you get 10 signed up is a goal you can control.

If you’re the sort of person who gets disheartened by setting goals you don’t achieve, this can make all the difference and give you more confidence.

 

If you’d like help deciding on which goals are most appropriate to get you through times of uncertainty, just get in touch. 

There’s some more information here on goal setting at How much luck is involved in reaching your goals 

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