Josh Feinberg Everlasting Capital CEO: It is all about taking SMART risk!

Most think that business risk is just a bet, like you were at a casino that can be calculated or eliminated by being smart. Thinking like that is somewhat true and somewhat false. In all actuality, risks are good and should be embraced for growth and a competitive edge, while others are bad and should be avoided completely.

Traditional risk focuses only on bad risks, and you look to limit losses. But if you want to grow and to have it be sustained you need to create smart risks, which means intentionally taking a risk to grow your business or gain competitive advantage.

In fact, business is all about taking calculated risks, but minimizing non-calculated risks. Here are some simple examples of "smart" calculated risks that you should be working on:

1. Provide a great solution to a painful problem. This can be high risk if your solution doesn't work, or your cost is more painful than the problem. A bad risk is assuming that you like the solution, everyone will buy it, or that you can build an existing solution cheaper than anyone else.
2. Plan to replace your current product or service with a better one. More companies fail by avoiding this great risk than any other. If the current product or service is making money, it seems like a bad risk to obsolete it. Yet, new competition can quickly blindside you, and the market changes. You need to broaden your opportunity.
3. Build a product or service that is a mix, not just focusing on one. Every new product or service you add makes ability to increase longevity and quality. Yet a great initial product or service, with no follow-on, will not keep you ahead of competitors. Take the strategic risk.
4. Implement a new business model and structure. Business 10 years ago, even 3 years ago is a-lot different than it is today. Be proactive implementing new business models, like easier process's and scaled pricing, are good risks, while just lowering old product prices is a bad risk.
5. Partner with a competitor. Use "competition" for cost sharing, learning new process's, and open access to new markets. Once you have established your credibility and value, a strategic partnership may lead to other business relationships or a funding source.
6. Plan to focus on marketing. It's a bad risk to count only on word-of-mouth and viral social network buzz for marketing, as I see in many business's today. These days, you have to spend money to make money. Of course there is work involved to find the right media, and balance the investment against the return.
7. Build your team from the best and brightest. Good people are not easy to find, which adds risk, but it's a strategic risk. Lowering the risk by hiring the cheapest, or counting on family members, is a bad risk.
8. Count on less funding rather than more. It's a well-known statement that business's which are over-funded to reduce risk fail more often than under-funded ones. Strategically, the more you can do for less, the stronger you grow. It's a bad risk to solve problems with money, unless you have F*** you money.
9. Be aggressive in your pro-forma's. Every person has heard from the "conservative" who reduces the forecast to lower the risk. These don't get bought, or they under-perform anyway. Pro-forma's should be strategic, based on the opportunity and pain level.
10. Lead rather than follow. Way back when, the leaders always caught the arrows, so following was less risky. People who try to reduce risk by following winners, like building another Facebook or another Google, will find that they don't catch arrows or make as much money as they could.

The hard part with all risks is that they must be before you think they need to happen, they must be measured, and they must be managed. If not, they will become bad risks most of the time. You have to think how much of your time is spent on trying to fix the bad risks, versus initiating good ones? If it is a-lot, you need to change your risks into good ones.

Josh Feinberg President/CEO of Everlasting Capital