Business Insight - Risk and Reward

risk assessment Having a passion to indulge in our spare time is perhaps one of the great pleasures of life. Filling many an hour doing something we find exciting, interesting, fullfilling and creative can bring great joy and satisfaction. It could be carpentry, painting, filmmaking, sculpture, photography or any other hobby you can imagine, which all have one thing in common, they all create a 'thing' we can look at and enjoy like a painting, or perhaps have a practical use like a chair. For many people there will eventually come a time when something they've made by their own hand, eye or mind will inspire thoughts of selling our creations or turning our skills into a new career. If the creative finds that amazingly they're good at what they do, creating stuff that people like and would rather be doing this than a real job any day of the week, we're getting in to the nitty-gritty of this article. This is where we begin to encounter risk, where we take a passion and turn it up a notch to consider entering the world of business to make some money, maybe to make a living.

Even having a hobby can involve risk. For instance, a painter has to buy paints, canvas and brushes to get started. Money is spent buying the essential tools then time has to be spent learning and doing. You might say that the risks are small and unavoidable and you'd be right. We risk spending some money on something we could get bored with or worse, we spend time doing something that we love but actually, we're very bad at it. However, if we get some pleasure from our creativity, good or bad, the risks are worth it.

The risks will be different for each person giving this some thought as so many factors must be considered but in broad terms one might be risking the loss of an investment, a decision to leave a secure job, the loss of time or an impact on a family or personal life. If we consider that, in order to be a success at what we want to do, itís unlikely that success can be achieved without risk. Of course some have ways of avoiding risk in the pursuit of success but for most, risk is a part of their venture so weíll ignore the lucky ones who donít have to think about it.

Thereís a risk of even writing this little article. I spend an hour or so putting the words together and then loading up on to CreativesGo and doing all of the other stuff that goes with that like tweeting about this article or adding a Facebook entry about it and then, nobody reads it. My risk is wasted time and effort. Itís a small risk no doubt but what could I have been doing with my time? Could I have been creating more stock images that might generate some sales income? There too is further risk, I decide to shoot those stock images, thereís a risk that I spend money buying photography equipment and spend time shooting the pictures and over their commercial lifetime those images donít make me any money. Thereís also a case for considering the risk of not doing something. What if I decide not to take the pictures but actually, they would have had great commercial value and made me some money? It's a risk to just waste oneís time doing nothing. Risk is interesting like that.

Once a decision has been made that we are good enough and yes I want to make some money from this, in order to achieve our goals we have to take a risk. It's wise to take a close look at the risk and weigh up the pros and cons of doing OR not making a go of it. How we work out what the risks are is going to be unique to each scenario but giving this a lot of careful thought with some detailed research can probably save a lot of heartache and pain further down the line. Ultimately we have to ask ourselves if the reward is worth the risk. Itís a built-in component of going in to business and should be considered from the beginning. Knowing whatís at risk can be a factor in deciding if a venture should be pursued or abandoned. Even if itís a dream to make a career out of that hobby, perhaps the risks are too great. Then, perhaps not.

The risks can be big or small, depending on the size of the entity being created. Maybe a large loan is taken out to pay for commercial premises and the risk is an inability to repay that loan because the business canít find any customers. Perhaps the loan was guaranteed by a second mortgage on a home, the risk is the loss of that house. Another big risk is the investment of oneís time, the hours, days, weeks that are invested in setting up a business. What about creating new work? A painter has to spend hours or days at an easel to make new pictures to sell. The risk is the hours taken to make the work that nobody wants to buy.

Risk is the one factor of starting a new business that most people who aren't in business don't appreciate or understand. When a successful person or business is encountered, those same non-business people only see the 'reward' part of the business, such as the fame, money, expensive cars and big houses. Reward is very conspicuous. Risk is very shy and keeps out of the limelight so generally nobody gives it a second thought. For every person who took the risk and made it, there's a bunch of people who didn't make it and probably lost a lot. Most people want the reward and at the same time most people don't want or even know about the risk. It's not until we make our own decisions to create a business that the concept of risk appears on the horizon.

Being a creative it can be hard to consider oneís work as part of a business, having to do the interesting creative things along with the boring and costly bits like marketing and promotion. Some consider that art should be treated differently from other commercial ventures and donít want to risk anything to achieve success from their art. As with anything in business, in order to sell something, a painting or a can of paint, investment has to be made in promoting the commodity and there we are back at risk again. The risk is that investment will be lost and no sales made. Even if an artist doesn't want to contribute to the costs of promoting their work, somebody else has to. Lets consider where most artists like to see their work, the gallery. Somebody, at some point, took a decision to take a risk and open a gallery. They invested time and money in getting that business off the ground and made it a success. Why should they take a risk on hanging an artist's work for free? Right there the gallery is taking a risk by giving wall space to one artist, whose work might never sell, when they could be hanging work by another artist, whose work might be more established and therefore easier to sell. Risk, risk risk!

For any person who has decided to make money from their creative skills thereís always an element of risk but without it thereís little chance of the reward, be that a sold painting or a profit reported on a balance sheet. Itís always there for all of us who choose this path and some will overcome it and some will succumb to it. For all that chase their dreams and take the risks, whatever they are, I salute you, for itís never an easy road to travel.

Disclaimer
All advice offered in this article is on an Ďas isí basis with not guarantee or warranty whatsoever and meant for general purpose discussion and guidance only. If you are unsure of any aspect of your business venture you should consult with an expert.

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