Task Force Entrepreneur
Task Force Entrepreneur (TFE) is a podcast for entrepreneurs interested in the service industry. It began as a way to document the creation of a new service-oriented business, and aims to provide a no-fluff narrative on all things entrepreneur!
Task Force Entrepreneur
Create your Unfair Advantage and Reduce Risk
In this show, we talk about good risk vs. bad risk, and more specifically, how to mitigate risk by creating an unfair advantage. This is one of the best business tips I picked up over the years, and I hope you find it useful. Originally aired August 21, 2023.
Hey everybody, mike here, and welcome to Task Force Entrepreneur. The podcast I started went from being a tech engineer to starting a house cleaning business. Yep, that's my story and I'm sticking to it. I hope you enjoy the show. Hey everybody, welcome back Mike here.
Speaker 1:In today's show we're going to talk about risk. I think this is a really important topic for entrepreneurs because we deal with it all the time, whether we admit it or whether we are aware of it. We deal with risk In early stages of a business. Risk might be that discussion that you have with your friends or family where they tell you you're absolutely insane for starting whatever business you're starting. Once the business is running, risk might look like taking a line of credit out to buy equipment to allow your business to expand, or taking on a very large client that you're probably not ready for.
Speaker 1:Either way, risk is there in business, but I would probably position that risk is inherent in everything we do. I mean it's life. You have a 1 in 2 million chance of dying falling out of your bed, a 1 in 43,000 chance of being killed in a work accident. You have a 1 in 10 million chance of being killed by lightning and, my favorite, a 1 in 250 million chance of dying by a falling coconut. So all I'm saying is risk is there whether we like it or not. So avoiding it completely would result in a very bland, boring and uneventful life. But let me be clear there's definitely good risk and bad risk. I mean, when I think of bad risk, I think of things like going to an unstable cliff and taking a selfie for Instagram that's bad risk. Maybe going scuba diving without actually being properly trained, speeding excessively on public streets and maybe tying it to a business, starting a company installing electrical components and having no insurance or certification to do the work that's bad risk. So I guess, if we kind of understand that bad risk is bad, then how do we weigh that so that we're not taking bad risk on right?
Speaker 1:And I would say we start with first understanding risk versus reward, and for me, what this really comes down to is high risk should equal high reward. But that's also the definition of gambling. If you like that, you probably would love Las Vegas. You don't want to do this, at least not when it comes to business. But the thing is that I think a lot of entrepreneurs miss is they all want high reward.
Speaker 1:I had a friend that and I've mentioned this on the show before if you didn't have a $50 to $100 million idea, you didn't want to talk about it. But the problem is, if he had a $5 million a year business which is still considered small, by the way then it would probably be life changing for him. So my point is you don't need high risk for high reward, you just need medium reward. That's still going to be life changing for you. So how do we take this from understanding, okay, well, we're still going to have some level of risk and we understand that we don't need to sacrifice everything for that reward, right? How do we reduce that risk? And, to me, my opinion is we mitigate it.
Speaker 1:And I guess the first way to mitigate risk for me, when I think of starting a business, is choosing a safe industry, something recession-proof, with a constant stream of work that constantly has very low quality options. And all of this comes back to, for me, service businesses. With these businesses, you don't need to own the local market, you just need to carve out your little slice. And again, that to me is that medium reward that could be life-changing. If you have a $2 million a year business, you're doing pretty good. Now another way to mitigate risk and my favorite without a doubt is creating your own unfair advantage. And I want to be clear when I say that phrase, I'm not talking about doing anything unethical or illegal or anything like that. I'm talking about using your skills, connections or even your personality traits that a lot of people allow you to stand out in a specific industry or business. So my example would be like let's say, you're really, really good at sales. Well, go find an industry where most of the people working in it and running businesses don't know a whole lot about sales. This places you at a significant advantage. In my case, with mission cleaning, this is one of my approaches. I do have a lot of experience with sales, and I don't think the average house cleaning company owner has a lot of experience with sales. So my career has been built on this.
Speaker 1:Concept of partnerships are incredibly important. Networking is incredibly important, and so for me, my strategy right off the bat is not to go throw flyers on a bunch of houses and knock on a bunch of doors. My strategy is to meet with realtors. My strategy is to talk to property owners and to search down Airbnb owners and network with all of those folks. I'm just thinking more along the lines of building relationships that could be fruitful down the line.
Speaker 1:Another example, though I mean let's say you're starting I don't know. Let's say you're trying to find a business to start related to house building. Maybe you don't want to be a house builder, but you could supply a component or something like that. Well, if you have a bunch of friends that are all house builders and run their own companies, then starting a window company that sells windows or installs windows could be a great unfair advantage for you.
Speaker 1:And I think this takes some practice. I mean, you have to really look inward, analyze your skills, analyze your connections, your resources and find out what makes you unique. And the weird thing about this is it varies by industry, right, like if I took my sales and engineering experience into tech, there's nothing really unusual about that. I mean, there's a million people that have the same experience as I do and are probably better. But, like I said, I could actually take that to an industry where that's not common, like plumbing, and probably stand out quite a bit. And the cool thing is you know it may be plumbing is a bad example.
Speaker 1:Let's say house painting. Right, because I know literally zero about plumbing. Let's say I wanted to go into house painting. I can learn how to paint a house. Anybody can learn how to paint a house. I realize the average homeowner probably does a poor job compared to a professional company, but you can learn to be a professional painter. You can buy supplies, you can watch videos, you can go get some, you know on the job experience, you can learn some tricks of the trade. That's possible and that's doable.
Speaker 1:What is hard, though, is getting 10 years of face-to-face networking experience right, and that's why my favorite way to reduce the risk is to mitigate it. You know, if we're honest, we're never going to eliminate risk completely. So when you know your friends or family or coworkers or whoever right says, well, you know that's, you know that's risky. I never view entrepreneurship as risky because, in my opinion, I am stacking the deck. What I mean by that is I am creating that unfair advantage by doing things that will reduce the risk.
Speaker 1:So if someone says, you know, well, getting house cleaning customers is hard work and you know what? If you don't get any, then you go out of business. To that I say I still have a day job Now. I don't know if that'll be the case forever, but it is for now. So I've reduced the risk of this financially impacting my family. Now could it still impact it to some degree? Yes, obviously. I've spent a fair amount of money on supplies and, you know, storage and all of that for the equipment and software and everything right, but I've mitigated it to a point where the impact wouldn't be super damaging.
Speaker 1:You know the next thing I've heard. You know, just to kind of give you some examples, I've had people say well, you know the people that you're going to get to clean these houses. You know they're going to be you know a varying backgrounds and some of them will have legal issues or criminal backgrounds and that kind of stuff. Right, well, we're running background checks. You think their quality of cleaning is going to be lower? Well, we're going to do training, extensive training.
Speaker 1:I'm going to institute shadowing so that even if a cleaner comes in and has experience, they're going to have to at least go on one or two cleans with another cleaner that knows our system and our processes, so that they can see firsthand how it's done with us. Now does that mean that we're always going to get it perfect? No, not at all, but I think it reduces the risk of someone walking in and just completely doing a horrible job, because they will have the tools necessary to do a good job. Hey, before you head out, if you could do me a big favor and leave me a review, it would be very helpful. I don't have that many reviews, but it really, really helps in terms of just spreading the word. So, that said, have a great day, music.
