Mastering the Three M's of Risk

How do you know when to take calculated risks that will pay off in your business?

In this episode, we delve into the critical importance of managing risk in business. We'll explore how businesses often mistakenly focus on minimizing risk, which can limit potential upside and introduce hidden dangers. We'll use data from the US Bureau of Labor Statistics to illustrate the high failure rates of small businesses and the key role risk management plays in their success or failure. We emphasizes understanding different types of risks—financial, operational, and market risks—and offers a framework, the 3Ms (Measurable, Manageable, Meaningful), to evaluate and manage these risks. Through examples of successful entrepreneurs and companies like Netflix and Amazon, we'll explore how calculated risks create significant opportunities. The episode also covers key blind spots in risk-taking, such as acting out of fear of missing out (FOMO), over-committing to a single move, and not having an exit strategy. Lastly, we highlight the importance of having a devil's advocate in the business to challenge assumptions and ensure strategic decisions. The episode is packed with actionable advice for entrepreneurs looking to navigate the complexities of risk and drive their businesses to success.

00:00 Introduction to Risk Management
00:40 Welcome and PSA
01:23 Small Business Survival Statistics
02:44 The Importance of Managing Risk
04:23 Real-Life Examples of Risk Management
10:09 Types of Business Risks
17:26 The 3M Framework for Risk Assessment
22:59 Strategic Pathways and Market Risks
23:20 Evaluating Manageable Risks
23:34 Financial Implications of Dual Paths
24:17 The Three M's of Risk Taking
25:07 Meaningful Risks and Business Impact
27:35 The Four Blind Spots of Risk Taking
27:56 Avoiding FOMO-Driven Decisions
30:02 Betting the Farm: A Cautionary Tale
31:21 Don't Get Married to Your Risks
33:10 The Importance of an Exit Strategy
34:28 Overcoming Cognitive Biases
35:31 The Role of a Devil's Advocate
40:40 Measuring and Adjusting Risks
44:34 Final Thoughts and Key Takeaways