Start-up gambling

In business, risk is generated on every new business plan. Every new activity or change of conditions comes with a level of uncertainty that has to be carefully considered and calculated.

The biggest gamblers in business are start-ups and especially the ones that dive in uncharted territories were nobody else has ever dared to exploit. They know they might find treasure but they also know that many of them will not survive. Over 80% of first timers in business fail. This is why business models that have been tested and work in practice are very popular to be replicated. The proof for that is the growth of the franchise industry that gas managed to reduce the risk of a start-up to 20% and is now over 900 billion dollars in the US only. Experienced mentors that have been there and have the market knowledge can also help others avoid the common risks and increase their success rate.

When a business activity has been copied many times and there are a lot of competitors in the market a new player can only bet on offering a better proposition. If the activity is completely new and no one else has ever done it before the bet is on persuading the target markets that this new product or service solves a problem and can make their life easier. When business owners cannot find any relevant previous data that could provide valuable knowledge the most common practice is to follow their heart. They do what they love and hope to succeed.

The problem is that a great accountant, craftsman, cleaner, plumber, tailor or any other profession does not necessarily make a great businessman. Business people can calculate risk take decisions accordingly and be aware of what they bet on and gradually reduce the risk as more real market data are coming in.