Here’s a problem I spotted which is quite common among the younger crowd – the idea, or romantic idea if you will, of “High Risk Businesses”

I met a guy the other day who was thinking of quitting his job, and over coffee he mentioned that he had a couple of business ideas that he wanted to put into motion

So I said great, let’s hear them out

Idea #1 – pooling money together with a bunch of friends to start a cafe selling western cuisine (red flags the moment I heard that one)

Experience – None whatsoever. None of them have been in the F&B line before this

Capital needed – each of them would have to put up at least 5-figures to get started. Not turn a profit, just to get STARTED

Idea #2 – pooling money together with a bunch of friends to start a frozen food business, selling frozen curry puffs and stuff

Experience – None as well

Capital needed – Total nightmare, because then you’d have to put in the logistical side, packaging, outsource production etc etc

It struck me as odd that someone would want to go into this line, particularly because I’ve worked with business owners in the F&B line and it’s one of the toughest industries to be in

Not to mention the amount of RISK that you’d have to shoulder from the start

So I asked him why these businesses, of all things that he could possibly do

His answer includes the words “cool”, “passion”, “should be able to make money”, “dream come true”…among other worrying things that he mentioned in our short conversation

But then again, this isn’t the first time I’ve heard of someone with no business experience who wants to go into what I call High Risk Businesses

These are business models that require 1) a lot of capital 2) a lot of relevant experience and 3) won’t be able to turn a profit so quickly

Make no mistake – under the correct execution, these businesses can make a ton of money

But…with everything in life, it’s a risk vs reward situation.

And sometimes, when you’re starting out, you need to mitigate the risks you take in business

I told him to dump these ideas immediately (he’s not in the position where he can afford to lose vast amounts of money either)

And I told him to focus on these following “baby steps” instead –

  1. Find a product or service that doesn’t cost him ANY money to start off with (this is easier than you think – there are always products that you can take on consignment, or take a pre-order etc)
  2. Figure out who is MOST LIKELY to buy these products from you (don’t sell to everyone, focus on those who are much more willing to buy from you so you reserve your effort for other things)
  3. Then master the art of selling online, on the internet (social media has made it exceedingly easy for us to do it these days, all you have to do is figure out how to make it work for you)
  4. Pay close attention to the sales closing process and improve it constantly (do your customers want delivery? do they want COD? that’s something that every owner needs to figure out – to make the process as simple as possible)
  5. After all that is done, scale it up – been making RM1K in profits? Time to figure out how to make RM2K and then RM5K, and then some more (then, and ONLY then, do you figure out how to scale up – before this, perfect the first four steps again and again)

People make the mistake of wanting to look at the big picture or the big money, but they don’t want to look at the small itsy bitsy steps that it takes to get to there.

But I’ve learned that it’s these small steps that eventually build you to where you want to get

Nobody gets to a million dollars without making their first dollar!

And more importantly, it MITIGATES the risk that you’ll be taking in this journey (Nobody wants to end up with huge debts if things go wrong, but that’s exactly what happens when you don’t mitigate your risk)