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Risk Management

Avoid Failure: Act on the Worst Case Scenario (While You Still Can)

This is the true-life story of US publisher Craig Reiss. He tells the story of how his start-up went from darling to dust during the economic meltdown of 2008 and give you a heads-up on how to ensure your business avoids the same fate.

Craig Reiss




In early 2007 we were working a huge convention with nothing more than a big idea and a lot of nerve. We were hot, and we were flaunting it. We had extraordinary talent and our product was immediately perceived as best in class. Through a flashy presence and sheer force of will, of which I had great reserves, we convinced the market we were the next big thing. Our customers were so engaged with our ingenuity that 20-minute sales calls turned into two-hour brainstorms. At our launch party, our customers came in Lamborghinis and our investors arrived in Bentleys.

Then the first economic tremors hit in early 2008 whenfuel topped $4 a gallon and Wall Street wrote off its first round of toxic billions from the bursting of the mortgage bubble. But we seemed to be alright.

The mood in our market remained well short of panic, although our customers delayed spending and started focusing on 2009. We fell behind projections, which was understandable for a start-up in its first year of operating. The picture right around the corner looked pretty damn rosy. By fall we were able to forecast substantial sales for 2009. We were set to have a profitable, scalable business if we could bridge operating capital – which we did – until the revenue started flowing.

We attracted a new group of individual investors from around the world, each with a stratospheric net worth. We went through intensive due diligence and structured a deal. Then the global financial markets quaked and collapsed, again and again, day after day, and the investors vanished in an instant. One minute we were a sure thing, the next, we were under-funded, over-committed and unable to hold on.

In the months that followed, I hunkered down into economic survival mode and shook off the emotional devastation of failure a layer at atime. I edited the summation of my entrepreneurial adventure, deleting any sense of victimisation. Now my story reads like this: I ran a business. Now it’s gone. I failed as a manager. I bet the house. Now it’s gone. I failed as an investor. The End

Anyone can fail – once. Fail twice and you transcend into a failure. What I’ve learned is that in the face of failure the only thing that matters is to live to fight another day. The tough-love survival tactics are best extracted from the lessons of failure.

Here are mine…

1. In order to survive, we must dedicate the totality of ourselves to it. This is very difficult to do. Concentrating on survival, instead of focusing on success, runs counter to the motivations and self-confidence that led us to be entrepreneurs in the first place. Yet it takes selfless dedication to strip away accommodations we’ve made to the realities we face.

2. Make a stone-cold assessment of the situation, no matter how unbearable the conclusion. This is essential to survival. There can be no tolerance for denial, no sustenance in victimisation, no excuses required.

3.We must be able to strip the truth as we have rendered it from the reality that confronts us. To let reality in, we must get out of its way. And survival is very much about what is real.

4. The means to survive are always before us. We must make ourselves able to see them by embracing the inverse of what we are doing.

5. We must be willing to change completely, even if the business that survives no longer resembles the business we started. We need to abandon what we hope or believe could happen – especially anything that would absolve us from the need to consider mere survival. Nothing else matters.

6. We are managers of our companies. And managers manage risk. In the end, we are judged on nothing else. Good times can obscure the cost of delusion. Bad times, like these, expose it for the lethal vulnerability it is. Had I not failed at this, I would have a business of some kind today. It’s that basic.

Here’s an easy test to determine if you should be taking survival strategy very seriously: Have you made any of these statements in thepast 30 days? “If we can just get around this corner, then things will pickup.” “If this one deal comes through, then others will follow and we’ll be all right.”

If we can hang on until we feel the impact of the economic stimulus bill, then things will work out.” “If we just pour some more money into get us through the tough times, then we’ll end up being successful.”

“If you’re overly confident or helplessly hopeful, you can substitute the word “when” for the word “if” in any of those or similar statements, but you’re still in jeopardy of being unable to respond to what you have to do to survive.

I used every one of those “if” propositions, and in my analysis every “then” had some miraculously positive outcome. Nothing contributed to my failure more than my unrelenting dedication to my original concept of success. It almost worked, but it didn’t.

7. Act on the Worst Case While You Still Could Be Wrong. If everything goes completely wrong, can you survive? If everything gets even worse than you can imagine, can you survive? Have you calculated what seemingly desperate manoeuvres you would have to take to survive, and precisely when those changes should kick in? Are your survival weapons locked and loaded? Have you eliminated anything that could muffle the blare of the alarms?

8.The key to survival is staying ahead of the need for it. No matter what state your business is in right now, its cost structure has to be amended. Renegotiate everything. Leases and loans have to be brought to a sustainable level, or the business must be restructured without physical location or need of capital. Obligations must be sub-let or abandoned. Cut sales commissions. Eliminate every job you can, and then eliminate almost every job you think you can’t live without.

We all tend to put off making drastic changes because we consider consequences. Cut commissions or salaries and we could lose our best people. Give up our location and we would look bad and no one will want to do business with us. Or we might think that we’ll never be able to get another location as good once things turn around. Or so we tell ourselves – and we’re wrong. Talent is a cost, not a dependency, and it must be measured against return.
A location grander than its return is vanity.

9. The biggest mistake we make is to become paralysed by our sunk costs. We’ve all put alot into our businesses. We can’t just walk away from those investments, certainly not without fundamentally weakening the business as we know it and, more emotionally, because it would make us look like we’ve been damn fools. But that’s exactly what we need to do. Money spent is money gone. We need to dedicate ourselves to the money that’s left. We have to measure every move against its contribution to survival.

Craig Reiss is the former editor-in-chief of Adweek, Brandweek and Mediaweek. He also was chief creative officer for Primedia, where he oversaw positioning for 150 media brands. Reiss is now principal of CIA: Customers Into Advocates, a Connecticut-based customer research firm.

Company Posts

How To Choose The Right Group Risk Cover For Your Business

Your clients and business partners are likely to be your main focus when you start out as an entrepreneur. But as your venture grows into a fully operative business of scale, your employees will matter just as much. That’s why it’s important to ensure you provide adequate employee benefits, and when it comes to group risk cover, it’s becoming increasingly important to find a solution that matches the needs of everyone in the business.

Schalk Malan




It’s no secret that the world of work, as we know it, is changing. In a 2017 employee benefits study, US insurer MetLife found that 58% of employees surveyed “want customised benefit options based on their personal information”. And according to the same study, 73% of employees believe their employer is responsible for employees’ health and financial wellbeing. And in spite of this expectation, modern employees are unlikely to stay with the same employers for very long, because technology continues to create new opportunities.

It is within this context that it’s important for you, the business owner, to make your business as attractive as possible by offering your employees benefits that truly match their needs. Start by thinking of yourself as a custodian of their financial security. And in terms of group risk cover, the financial security not only lies in the cover itself, but in offering benefits that add real value to your employees’ financial planning – especially when you consider that it is your employees who are contributing towards their cover.

Why do you need group risk cover for your business?

Employers buy group risk cover for the people in the company to cover their future pay cheques in case something happens where they can’t work before they retire.

But this, unfortunately, is not the case with traditional group risk products, which typically offer blunt amounts of cover that is equal to, for example, three years of pay cheques for everyone in the company – irrespective of how many pay cheques they have left before retirement. As a result of this approach, younger people in the company have less cover compared to what they need, relative to their older colleagues who have fewer pay cheques left

Traditional group risk products also offer very little flexibility, leaving employees with little, or no option to buy more cover above what employers secured. They also don’t offer a choice between lump-sum or recurring payouts when members claim, or always secure the ability to take their cover with them, should they decide to leave the company.

Related: How BrightRock Is Rocking The (Industry) Boat In Only 5 Years Since Launch

So how will you know you’ve selected the right cover?

Start by asking your financial adviser to look out for a product that works out how many pay cheques each employee needs to cover, and then gives every person in the company the same level of cover in proportion to the amount of pay cheques left until retirement. By following this approach, your employees’ cover will provide more people in the company with much more cover. There already are forward-thinking group risk cover providers in the market that manage to offer up to 50% more cover by following this approach.

Secondly, ask your financial adviser if your employees will be able to buy more cover over and above what you secured. There are innovative products on the market that offer up to double the cover free of underwriting, which enables your employees to benefit from the insurability you’re providing them, and to close gaps in their insurance.

And – in the spirit of the modern world of work with a more mobile workforce – these innovative products enable employees to take the cover with them when they decide to leave your company.

It’s also important to ask your financial adviser if your employees will be able to choose between a lump sum and recurring pay-outs when they claim. Traditional group risk policies tend to expect employers to make one choice  between lump sum or recurring payouts on behalf of all of their employees when they take out the cover. Forward thinking cover providers have turned this approach on its head, offering employees the option to choose between recurring or lump sum payouts when they claim.

The importance of claims certaintly should never be understated, starting with obtaining a clear picture of the clinical conditions the group risk cover actually covers. There are new players in the market that provide extensive and transparent lists of clinical claims conditions for additional expense needs, covering more than 200 conditions.

And exactly how permanent does the insurer view a claim for a permanent condition? For example, if an employee is to be diagnosed with Stage 4 cancer, will he or she receive a 100% payout on diagnosis, without the prospect of ongoing reassessment? A needs-matched product offering would never require the reassessment of permanent expense needs claims.

In conclusion …

You wouldn’t expect your employees to work under dangerous conditions. So why would you select a group risk product that will not serve in their best interests when they need it most? That’s where needs-matched group risk cover comes to the rescue – not only for your employees, but also for your business by providing security and benefits offering real value in the modern world of work.

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Risk Management

How to Take Risks That Win (Almost) Every Time

Knowing which risks to take, and how to take them, can be extremely helpful in stacking the odds in your favour.




Looking 13,000 feet down out of an airplane, parachute pack secured, your heart beating in your throat, must be one of the most terrifying experiences imaginable. Though not all risks are life-threatening, all risks are frightening. As humans, we’re constantly afraid of failure, of doing something wrong and of having to deal with the consequences. Yet, at the same time, there is nothing more rewarding than reaping the benefits of a risk gone right – of landing safely ground, to build the earlier metaphor.

For entrepreneurs, risk taking is a necessity of the job. After all, we’re never quite positive that things are going to work out the way we envision. We make choices daily which affect our business, and we can never be absolutely sure that we’re making the right ones.

Knowing which risks to take, and how to take them, can be extremely helpful in stacking the odds in your favour. While risks are unavoidable, approaching them strategically can be the best way to decrease your parachute’s chances of failing, so to speak, and to produce measurable results that you would never have achieved had you avoided the risk in the first place.

Related: Dream Big, Plan Well, Minimise Risks Says Braam Malherbe

In order to hone your risk-taking skills, here are some guidelines:

1. Information is your friend

The more knowledge you have about any given topic, the less risky your endeavours will ultimately be. For example, many of the most steadily successful brokers on Wall Street are those who understand the patterns of the market better than anyone else. While there are always going to be those people who make millions off a risky uninformed bet, they are the same people who most likely will lose all their earnings on a single trade. Traders who build a sustainable career for themselves are the ones that have deep knowledge of the industry.

Similarly, you should be an expert in your field. You should know your industry well – your product or service you are providing. You should understand the buying patterns of consumers, their motivation and pain points. What drives them to buy your products? Where and when do they buy? What makes them stop buying?

As an entrepreneur – or in any profession that requires risks, really – you’ll want to have as much information as possible. The more you know, the fewer unknowns there are. The unknowns, ultimately, are what makes an action risky.

2. Assess the risk carefully

While risk is a reality of life, there is also something to be said for strong assessment skills. Being able to look at a risky situation and decide whether or not it’s worth taking is a hallmark of a good businessperson.

Venture capital investors, for example, spend their entire careers deciding which companies are worth risking time and money on. Those who throw their money around recklessly, while admirable for their risk-taking, are not necessarily the most successful investors.

Being a good risk-taker involves using the information you have to assess a situation and decide whether or not the risk is worth it.

Related: 5 Infamous Risks Every Entrepreneur Must Face

3. Learn from failure

Appreciate that all risks are learning experiences. Especially those that don’t pan out.

On some accounts, failure is actually more valuable than success. While failures may not lead to an increase in your bottom line, you can use the opportunity to glean important information about what you’ve done wrong, where you misstepped and how you can move forward in the future.

The biggest mistake many people make is seeing failure as a measure of who they are, rather than a measure of where they can go. We’ve all heard that failure is feedback. Most successful entrepreneurs failed at many ventures before they created that million-dollar offering. Most overnight successes took many years to make. If you take a risk and fail, learn from it. Ask yourself what you can do differently next time, and then move on. The only failure is not learning the lesson that it provides and using it to hone your next endeavour.

According to Mark Zuckerberg, “The biggest risk is not taking any risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”

Taking risks is the only way to go from here to there. Even failed risks move you closer to your goals if you can turn that failure into valuable learning and a plan for improve your results next time.

This article was originally posted here on

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Risk Management

Are You Focusing Too Much On The Little Details (And Forgetting The Bigger Picture)?

To what degree do outside influences impact your business’s success? As a business owner, should you be focused on your business, or taking a macro view of the world?

Nicholas Haralambous




Entrepreneurs live in the daily grind of their businesses. This is unavoidable but can often be fatal. Day to day we think that the little things matter more than the very big things do. A little thing like the floor of your office or store being mopped daily can become a huge issue if not done.

Sure, these things are important because they create a culture of care and pride, but what you might be missing while you watch your team mop the floors is the macro-economic climate shifts that happen more rapidly than you think.

Step back to move forward

Early in the life of a new business the only way to survive is for the founders to do absolutely everything. From designing a logo and launching a strategy all the way through to writing tweets and emailing customers when there are issues.

This makes sense when you’re building a business, your team is small and your cash is tight. However, as you grow, it becomes important to let your people do their best and take on the day to day work.

Related: Expanding At The Speed Of Stress

As an obsessive entrepreneur it’s often hard to let go of these little details. Day to day operations will always be integral to the growth of your business and an important part of someone’s job in your organisation. However, it shouldn’t be yours if you are taking care of the big picture.

As the leader of your business you need to take a step back from the grind and look at the world around you.

To truly understand the positioning of your growing business you need to understand your country, continent and world.

You should understand the economic position you’re in as well as that of your province, country and even the markets that might directly influence your sales. Get a good understanding of the political stability of your country and the world.

Finally, you should figure out if there are any large- scale impending disasters. If disaster is imminent, like Zuma pillaging a nation and tanking an economy, then you have to get your head out of the floor mopping and into the high-level strategy of survival and preparation for disaster.

Move the needle


Every day there are 24 hours that you can fill. You can choose to work during that time and faff with the things that were once important, or you can figure out what is going to move the needle in your business.

What is going to really help you survive and grow in the years to come? Founders, CEOs and leaders need to be thinking about the next three, five and ten years. Let your team worry about today. Let the smart people you work with make today and tomorrow and next week work.

Chances are, the things you are doing in the hours/minutes aren’t saving your business or moving the needle. It’s the things that you plan for the next six months that affect the next five years.

Related: 8 Rules To Build Wealth When You Weren’t Born Into Money

Don’t live in a bubble

It’s easy to fall into the trap of thinking that you live in an isolated country or region that isn’t affected by world events. Unfortunately, no matter how hard you close your eyes and hide your head under the pillow you can’t avoid the fact that your business exists in a globally connected environment.

At Nic Harry we were affected by the Brexit events that unfolded in the UK and Europe. British shoppers were scared and didn’t spend their money when they were on holiday in Cape Town over the peak holiday season. I was so busy preparing for the seasonal uptick that I missed the link between a huge global event and my sales.

You live in a world that is filled with online shoppers and tourists who visit your business whether you know it or not. Prepare for the world to start having an effect on your business more and more.

Broaden your view

I am always fascinated by the narrow view of the world many entrepreneurs display. I may sell men’s socks, accessories and style but that doesn’t mean that the mining sector doesn’t affect my business.

Related: How To Plan, Prioritise And Get It Done Now

Even if you were an entrepreneur building a business in Antarctica I would urge you to read about oil prices, political world events and the intricacies of overfishing in the South American seas. Being well rounded and having a broad view of the world and your business can only make you a more robust thinker who sees more angles to exploit, protect against and thrive on.

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