Dan Martell - How To Take Risk In Business Without Losing It All

00:00:00.840 Is the guy in the basement?

00:00:03.680 He hasn't come out of it.

00:00:04.720 All right, we may have a ghost in the building.

00:00:06.880 Like, can I go in your basement? 1.00

00:00:08.040 Holy shit, man. 1.00

00:00:12.280 He went in the basement. 1.00

00:00:13.600 And he's on a head-to-air basement.

00:00:15.480 Is the light on?

00:00:24.520 How much risk should you take in your business?

00:00:26.720 In this video, I'm gonna break it down.

00:00:28.520 If you've ever felt like, man, should I stop listening

00:00:31.960 to these people telling me that I'm crazy

00:00:34.060 or should I not consider putting my whole life savings

00:00:37.860 into my new business or maybe you just don't know

00:00:41.480 what to listen to, that's the challenge

00:00:44.340 because I think people will say,

00:00:45.420 you gotta be a risk taker, you gotta burn the boats,

00:00:47.280 you gotta be all in.

00:00:48.400 The truth is, and I'm gonna give you guys some examples,

00:00:50.820 there are limits to how much risk

00:00:53.240 and who's involved in that risk.

00:00:55.340 And I'll walk you through my framework,

00:00:56.980 But, you know, I understood this

00:00:59.220 because I remember the day my brother came to me

00:01:00.880 and he's like, Dan, I wanna build houses.

00:01:02.600 And you gotta understand, he'd never built a house before.

00:01:05.000 He helped a friend build a house.

00:01:06.620 He had no experience, but there were elements there

00:01:09.600 that I knew that it made sense for him.

00:01:11.960 He was passionate about it.

00:01:13.500 He had the skills.

00:01:15.180 He actually was very handy.

00:01:16.380 He was a mechanic.

00:01:17.220 He was handy with his hands.

00:01:18.560 He knew how to build houses because of his friend.

00:01:21.700 So, like, it wasn't a stretch.

00:01:23.480 And it wasn't like he came out of the gate and said,

00:01:25.380 I'm gonna build 100 homes this year,

00:01:26.940 although he ended up doing that,

00:01:28.900 he really set the intention of,

00:01:30.800 I'm gonna build a house, one house.

00:01:32.480 And my thoughts were, at the end of the day,

00:01:34.780 you don't even build the house,

00:01:36.300 you manage the contractors who have the skills,

00:01:38.340 who have the 20 years of experience doing it.

00:01:40.420 It's the same people that other people use.

00:01:42.960 So there's ways to look at the business,

00:01:44.920 and that's what I wanna walk you through in today's video.

00:01:46.940 I also believe, in the valley, in Silicon Valley,

00:01:49.960 my world, software, technology, venture capital,

00:01:52.260 that a lot of these entrepreneurs are not risk takers.

00:01:55.940 And I'm gonna probably get a lot of people in the comments

00:01:58.880 being all upset like, what are you talking about?

00:02:00.560 I took risk.

00:02:01.400 Look, there are those that exist.

00:02:02.600 There are people that take everything they have,

00:02:05.020 move to the valley and put it all into their company

00:02:07.480 and they make it work.

00:02:08.500 But the truth is for many of them

00:02:10.120 that are working at Facebook, Google, Twitter, Instagram,

00:02:13.580 wherever they're at and they decide to go join an accelerator

00:02:17.040 and get 250,000 in seed funding to build their company

00:02:21.580 that even if they failed, A, they're in their early 20s,

00:02:25.300 B, they've got the money so they can test out their ideas,

00:02:28.220 and C, if they failed, they would just go back

00:02:30.520 and get the job they had.

00:02:32.180 So, worst case scenario,

00:02:34.140 I'm making 100 plus grand a year if I fail.

00:02:37.460 So, to me, I really think that risk is relative,

00:02:40.500 and I mean, when you look at the Elon Musk

00:02:42.320 that truly put everything he had into these three companies,

00:02:45.800 he had a foundation for making that decision.

00:02:48.940 It wasn't like the first business he decided to start

00:02:51.780 was a car company, and I think a lot of people,

00:02:54.160 they use these stories and these reference points

00:02:56.440 out of context, right?

00:02:57.920 Steve Jobs and Pixar, I mean, he built

00:03:00.780 a multi-billion dollar company from the age of early 20s

00:03:04.280 to 30, and then took some of that money

00:03:07.260 and invested in Pixar, and only once he started

00:03:09.360 seeing some proof points that he then doubled down

00:03:11.800 and grew that, and he even raised money from Ross Proto.

00:03:14.080 So like, all that to say is that I think there's risk.

00:03:17.940 It's required to build a business.

00:03:19.500 I think it's within context and I'm gonna give you

00:03:21.340 my framework for how to think about that.

00:03:23.120 So number one is horizon.

00:03:24.620 I truly believe that whatever you have as a skillset

00:03:27.640 and if you wanna start a business,

00:03:29.060 it cannot be outside of the horizon

00:03:31.680 on where you're at today and where you wanna get to.

00:03:33.560 So if you've absolutely come into an industry,

00:03:36.320 have never ever been exposed to it,

00:03:38.520 talked to people in that industry,

00:03:39.720 have any context for it, have any experience whatsoever,

00:03:42.800 that is kinda crazy.

00:03:43.900 I really think it should be about,

00:03:45.660 the first leg of the business,

00:03:47.400 the first testing zone, the first revenue

00:03:49.500 should be about 20% further than where

00:03:52.180 you have been in the past.

00:03:53.360 So maybe you've done the work,

00:03:54.500 you worked for another company,

00:03:55.440 and now you wanna do that as your own business.

00:03:57.340 You've already got that part.

00:03:58.960 The 20% is really starting the business.

00:04:01.200 So I call it within the horizon of where you're at

00:04:04.400 and where you wanna get to.

00:04:05.440 And every time you get to that new level,

00:04:07.420 the cool part is the horizon gets further and further away.

00:04:10.560 And that's how growth happens.

00:04:12.660 The other thing I believe when you take risks

00:04:14.540 is you should never risk other people's quality of life

00:04:18.020 without their permission.

00:04:19.100 So I have a really, you know, a big issue

00:04:22.460 with people putting their house and their mortgage

00:04:25.040 and all these things on the line if they have a family.

00:04:28.480 And especially if they didn't consult or ask their family

00:04:32.040 if that was appropriate because those people

00:04:34.840 did not sign up for that crazy ride.

00:04:37.260 And the truth is is that if you've gotten

00:04:39.060 into that situation, it's probably a pattern

00:04:42.800 bad decision making that you need to figure out

00:04:45.020 and solve first and that I just don't think

00:04:47.360 it's appropriate.

00:04:48.200 Now, did my brother remortgage his house

00:04:49.700 to build his home building company?

00:04:50.980 You betcha.

00:04:51.980 Was he a single person at the time

00:04:53.480 and he owned his house?

00:04:54.320 Yes, he was.

00:04:55.320 So that's different.

00:04:56.300 So I really think when it comes to it,

00:04:57.660 you need to get permission from other people

00:04:59.460 that are gonna be impacted when taking that risk.

00:05:02.120 So instead of putting your whole house mortgage,

00:05:04.780 maybe you take $10,000 out and you invest it

00:05:07.560 to try to get some early customers

00:05:08.960 and you cap it at that and you focus on that

00:05:11.200 And that is the test.

00:05:13.240 It's a compartmentalized thing.

00:05:15.520 It's not going too far and stretching yourself.

00:05:17.560 And I get some people, again,

00:05:20.300 they just, they wanna make it feel like I'm all in

00:05:23.440 and all this stuff.

00:05:24.460 Look, if you've got a job, work at the job,

00:05:27.600 do the side hustle, get to about 10,000 a month in revenue

00:05:31.080 and then make the switch.

00:05:32.320 And that's just the truth.

00:05:33.560 A lot of people talk about all this risk, hustle stuff.

00:05:38.120 I'm giving you a framework to better way to think about it

00:05:40.600 so you can stop, unfortunately, inflicting pain

00:05:43.280 in other people's lives that care about you

00:05:45.060 that they didn't sign up for.

00:05:46.240 So the third is try to start a business

00:05:49.080 that's within your magic zone.

00:05:50.460 I learned this from John C. Maxwell,

00:05:52.360 one of the top leadership experts in the world,

00:05:54.480 and he talked about it's not just enough

00:05:56.420 to get outside of your comfort zone,

00:05:58.620 but you need to get within your magic zone.

00:06:00.660 You need to get into an industry that you love,

00:06:04.000 that you understand, that you feel like

00:06:06.180 that is my calling in life, not just do something

00:06:09.900 because you think there's an opportunity.

00:06:11.480 Which brings me on to the fourth aspect of it

00:06:14.040 is what wrong do you want to right?

00:06:16.300 If you're getting into business, don't tell me,

00:06:18.740 I think there's an opportunity in the market

00:06:20.400 for this business.

00:06:21.480 That is the worst way to start a company.

00:06:23.700 Sure, I mean, you want to find a trend.

00:06:25.620 Sure, you want it to have opportunity.

00:06:27.820 Sure, you want to have like maybe a partnership

00:06:29.660 to get you early distribution,

00:06:31.140 some kind of unique unfair advantage in that industry.

00:06:35.140 But to just do it for pure financial reasons

00:06:37.640 is the craziest reasons to take risk in your business.

00:06:40.620 So I always say, tell me the wrong that you wanna right,

00:06:45.400 and that needs to be the underlying reason

00:06:47.520 that you're getting into this business

00:06:49.140 and taking the risk.

00:06:50.740 You know, that to me, those four areas, right?

00:06:53.340 So one is the horizon, 20%, like where do I wanna go

00:06:56.700 and is this just a little bit further than my capabilities

00:06:59.420 and I'm stretching myself?

00:07:00.920 Two is other people in my life that I'm impacting

00:07:04.020 in that decision, don't put them

00:07:06.840 in the harm's way, the risk changing their lifestyle

00:07:09.720 unless you get permission from them.

00:07:11.960 Three is the magic zone.

00:07:13.200 Make sure you're outside of your comfort zone

00:07:14.700 within your magic zone.

00:07:15.800 And the fourth is what wrong in your life

00:07:18.700 do you want to right?

00:07:19.760 I want to ask you guys below.

00:07:21.660 In the comments, I want you to leave me a story

00:07:23.480 and let me know a story of the biggest risk

00:07:26.300 that you took in your life.

00:07:27.220 And if you guys answer them there,

00:07:28.780 I'll leave my own personal one.

00:07:30.640 There's so many great things,

00:07:32.880 but they all follow this pattern.

00:07:34.320 I just want to give you that framework

00:07:36.580 so that you guys don't go out there and obviously

00:07:39.860 make decisions that might hurt other people

00:07:41.800 or hurt yourself or cause you to lose everything

00:07:44.360 you've ever had because that's just not a great way

00:07:46.600 to get into business because it might stop you

00:07:48.380 to keep trying again if that one fails.

00:07:50.560 So leave me a story below in the comments

00:07:52.520 with your biggest story and as per usual,

00:07:53.940 I wanna challenge you to live a bigger life

00:07:55.860 and a bigger business and I'll see you next Monday.

00:07:58.140 If you like this video, be sure to subscribe to my channel

00:08:00.820 where you will get other videos on how to start

00:08:03.020 and grow your business and then also I'd encourage you

00:08:05.120 to join my newsletter where I send out

00:08:07.520 exclusive invites to events, free training videos,

00:08:10.520 and community contests.

00:08:12.360 And if you're, you know, roaring to get going

00:08:14.780 and you want more content, be sure to watch

00:08:17.080 these couple videos I've got queued up for you.

00:08:18.960 I will see you next week.

Dan Martell - September 05, 2016

How To Take Risk In Business Without Losing It All

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