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Saturday, November 9, 2013

Author: 9 risks necessary to build a sustainable business

Submitted by Dottie DeHart of DeHart & Company Public Relations,

Often, entrepreneurs try to avoid risk because they want to protect their businesses from harm. Unfortunately, says Tom Panaggio, lose your willingness to risk and you also lose your edge. 
He explains why risk is NOT a “one leap and you’re done” proposition.

“Risk is eternally linked to opportunity,” says Panaggio, author of the new book The Risk Advantage: Embracing the Entrepreneur’s Unexpected Edge. There is nothing wrong with taking the safe way out—millions make that choice—but successful entrepreneurs are a different breed. They are professional risk takers and they need to be willing to strap on that parachute every day.
 “Though we typically associate risk with the initial leap-of-faith decision to start a business, to achieve real success, one must consistently embrace risk every day, and not just on the business’s first day,” he clarifies.
Panaggio knows all about the rewards of risk. Along with several partners, he has built two thriving companies: Direct Mail Express (which now employs over 400 people and is a leading direct marketing company) and Response Mail Express (which was eventually sold to an equity fund, Huron Capital Partners). He wrote The Risk Advantage to help entrepreneurs face the many situations, predicaments, and crises they’ll encounter during their lives and to help formulate their leadership style and business strategy.
 “A willingness to take risks separates leaders from the rank and file,” says Panaggio. “If you lose the spirit of risk, the business begins to decay. From startup through the last sale, the spirit of risk is the unexpected edge for every business
Be the pig. “Are you a chicken or a pig?” Panaggio writes that he frequently heard one of his business partners, Phil Turk, ask this odd question. One day, Panaggio asked him what it meant. Phil explained, “Think about a bacon and egg breakfast. The chicken is involved, but the pig is committed.”
“Lending an egg to a breakfast meal, the chicken participates but sacrifices nothing,” explains Panaggio. “However, the pig literally has skin in the game. He is most definitely fully committed. Following your entrepreneurial dream by giving everything you have is like being the pig: You have to be fully committed.
Finance the dream yourself. Giving up your hard-earned money is the ultimate risk. To pour life savings into an entrepreneurial pursuit is like walking the tightrope without the benefit of a safety net. It takes courage. Even though the commitment is substantial, it’s necessary to motivate you to keep pushing forward. Money buys resources, technology, and manpower—all critical elements in helping a new business succeed.
Sacrifice your most precious possession: time. When you pursue a new enterprise, one resource that cannot be reimbursed, borrowed, or saved in an account for later use is time. Time is the most perishable resource of all. Time is finite; it’s more precious than money and more costly to waste.
Don’t be a non-decider. In business, you need to decide over and over again. The first decision you make is to jump in and pursue an entrepreneurial dream, but decisions don’t end there. And every time you make a decision, there’s a risk: These are the risks of failure, not being accepted, and making wrong choices. Don’t let that stop you, urges Panaggio.
“By making decisions, whether right or wrong, you are progressing and moving from where you were to something different,” he says. “When making no decisions, nothing happens. You’re in stagnation, and your business will suffer. Despite this, there are people who refuse to make decisions. You can’t be an entrepreneur and avoid decision making. You make your move and then embrace the risks that come with that move.”
Change or die. Businesses are like sharks: They have to keep moving, or they will die. The rule is simple: Businesses must progress, and progress requires change. In the business world, fear of change probably is the single biggest obstacle businesses need to overcome to meet the evolving marketplace challenges. What makes embracing change even more difficult is that a business must be willing to simultaneously change internally and externally to keep progressing and remain competitive.
Forget the “If I had…” excuse. Some entrepreneurs are like a little boy standing with his nose pressed to the candy store window, hoping and thinking, If I had a couple of pennies, then I could buy some candy and everything would be great. Sub in new technology, a bigger store, a larger advertising budget, and on and on, for those two pennies and you get excuses made by struggling entrepreneurs everywhere.
 “Entrepreneurs must be self-reliant,” notes Panaggio. “You must get comfortable looking to yourself as the solution, not other people or objects.
Expect to fail. Starting and building a business is like being a child learning to ride a bike. To master the skill of riding a bike as well as learning to be a successful business leader, you must first embrace the risk of failure and expect to fail. What both child and entrepreneur must realize is that failure is not defeat but a signal that a change is necessary.
“By expecting to fail, we accomplish two very important objectives,” explains Panaggio. “First, we are willing to embrace risking failure by doing something to keep our dream moving forward rather than avoiding risk and doing nothing. You can’t hit a baseball unless you swing the bat. Second, we set the proper expectation mentally that we are planning for the best but preparing for the worst. This is not a defeatist attitude, but it gives the opportunity to prepare for recovery and make another attempt.”
Spend money on marketing. Marketing is key to building a successful business. But it is also something that many entrepreneurs are loath to spend their money on. Instead, they offer these handy excuses: “I tried it once and didn’t get any response, and so I stopped.” Or, “There’s just no money for marketing this quarter. Maybe I’ll try something next quarter.” It’s no doubt that it is hard to know what consumers think and what their day-to-day needs are, but a business void of a long-term and consistent marketing effort is doomed.
“At RME, our motto was very simple: He who markets most wins,” says Panaggio. “In fact, we used marketing risk as a competitive edge against our competitors. Anyone wanting to become a potential competitor had to be willing to match our investment and commitment, and just doing a little marketing wouldn’t have been enough to catch us.”
Competitors were forced to divert resources and money from other areas of their business to keep up with RME’s aggressive marketing strategy, he explains. This limited their ability to expand and innovate. The irony is, competitors weren’t willing to embrace the same risk of marketing that they were trying to convince their prospects to do, and they also weren’t willing to embrace it to stay competitive with RME.
“Accepting marketing risk also means recognizing that some degree of failure is both inherent and necessary to find your right path,” says Panaggio. “We knew that our marketing message was going to be received by some who were not ready to buy. Therefore we committed to a consistent, ongoing strategy to ensure that our message got in front of prospects when they were ready to buy. You can’t accomplish this by sending a single message and hoping prospects individually remember you and then respond months later.”
Get up close and personal with customers. Shortsighted business leaders assume that customers have unreasonable expectations or their demands will increase once you open the door of a relationship. After all, what if you start talking to them and they start wanting better pricing, extended credit, or other special considerations.
“The truth is customers require consistent care and investment,” says Panaggio. “You must risk investing in the necessary resources to draw your customers closer. You start by understanding the customers’ experience, and then continue maintaining a consistent line of communication throughout your relationship.”
Sure, as a small business, money is tight, but the simplest solutions are just as effective as grand gestures. A short thank-you note after a customer places an order, whether it is done via email or by sending a handwritten thank-you card by regular mail, is an easy way to start building personal relationships with your customers.
Panaggio  said, “If you lose a customer due to price or other circumstances beyond your control, then fine. However, losing a customer because they felt unappreciated or underserved is inexcusable; it indicates serious flaws in your internal business processes that lead to additional losses. The easiest way to avoid customer churn is by continuously reaching out and communicating; the sales process never ceases.”
 To be a successful entrepreneur, you have to recognize that taking advantage of opportunities—big and small—means embracing the risks that come with them. And then you have to be willing to embrace those risks day in and day out. Keep that parachute handy,” said Panaggio.

About the book: "The Risk Advantage: Embracing the Entrepreneur’s Unexpected Edge"(River Grove Books, 2013, ISBN: 978-1-938-41644-6, $14.95, “

About the author: Tom Panaggio has enjoyed a 30-year entrepreneurial career as cofounder of two successful direct marketing companies. In 1983 he cofounded Direct Mail Express (DME) in Daytona Beach, Florida, with his siblings Mike and Kathy. DME has always been on the leading edge of marketing technology and is still recognized as an industry leader in personalized digital marketing.
As CEO of spin-off RME in Tampa, Florida, Tom headed a company that created an effective lead-generation program in the financial services industry. RME revolutionized financial services marketing with its Seminar Success program, a marketing system that has created billions in sales for their clients.
Originally from Rochester, New York, he currently resides in Tampa, Florida.

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