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- Is the guy in the basement?
- [Man] He hasn't come out yet.
- Alright, we may have a ghost in the building.
Can I go in your base?
Holy ***, man.
He went in the basement.
- [Man] Yeah, he's not answering me.
- Is the light on?
(upbeat music)
How much risk should you take in your business?
In this video, I'm gonna break it down.
If you've ever felt like man, should I stop
listening to these people telling me that I'm crazy?
Or should I not consider putting my whole
life savings into my new business?
Or maybe you just don't know what to listen to.
That's the challenge because I think people
will say you gotta be a risk taker,
you gotta burn the boats, you gotta be all in.
The truth is, and I'm gonna give you guys some examples,
there are limits to how much risk
and who's involved in that risk.
I'm gonna walk you through my framework,
but I understood this because I remember the day
my brother came to me and he's like,
"Dan, I wanna build houses."
And you gotta understand, he'd never
built a house before, he helped a friend build a house,
he had no experience, but there were elements
there that I knew that it made sense for him.
He was passionate about it, he had the skills,
he actually was very handy, he was a mechanic,
he was handy with his hands, he knew how to build houses
'cause of his friend, so it wasn't a stretch.
And it wasn't like he came out of the gate
and said I'm gonna build a hundred homes this year,
although he ended up doing that, he really
set the intention of I'm gonna build a house, one house.
My thoughts were that, end of the day,
you don't even build the house,
you manage the contractors who have the skills,
who have the 20 years of experience doing it,
it's the same people that other people use.
So there's ways to look at the business
and that's what I wanna walk you through in today's video.
I also believe in the Valley, in Silicon Valley,
my world, software, technology, venture capital,
that a lot of these entrepreneurs are not risk takers.
I'm gonna probably get a lot of people
in the comments being all upset like,
"What are you talking about, I took risk."
Look, there are those that exist.
There are people that take everything they have,
move to the Valley, and put it all
into their company and they make it work.
But the truth is, for many of them
that are working at Facebook, Google, Twitter, Instagram,
wherever they're at and they decide to go
an accelerator and get 250,000 in seed funding
to build their company that even if they failed,
A, they're in their early 20's,
B, they've got the money so they can test out their ideas,
and C, if they fail, they would just go
back and get the job they had.
So worst case scenario I'm making
a hundred plus grand a year if I fail.
To me, I really think that risk is relative
and when you look at the Elon Musk, that truly put
everything he had into these three companies,
he had a foundation for making that decision.
It wasn't like the first business he'd decided to start
was a car company, and I think a lot
of people, they use these stories
and these reference points out of context, right?
Steve Jobs and Pixar, he built a multi-billion dollar
company from the age of early 20's to 30
and then took some of that money and invested in Pixar.
Only once he started seeing some proof points,
that he then doubled down and grew that.
He even raised money from Ross Perot.
So all that to say is that I think there's risk.
It's required to build a business.
I think it's within context and I'm gonna give you my
framework for how to think about that.
So number one is horizon.
I truly believe that whatever you have
as a skill set, if you wanna start a business,
it cannot be outside of the horizon
on where you're at today and where you wanna get to.
So if you've absolutely come into an industry
and have never, ever been exposed to it,
talked to people in that industry, have any context for it,
have any experience whatsoever, that is kinda crazy.
I really think it should be about
the first leg of the business, the first testing zone,
the first revenue, should be about 20% further
than where you have been in the past.
So maybe you've done the work, you work for another company
and now you wanna do that as your own business.
You've already got that part.
The 20% is really starting the business.
I call it within the horizon of where
you're at and where you wanna get to.
Every time you get to that new level,
the cool part is the horizon gets further and further away.
That's how growth happens.
The other thing I believe when you take risk,
is you should never risk other people's quality
of life without their permission.
I have a really big issue with people
putting their house and their mortgage
and all these things on the line if they have a family.
Especially if they didn't consult
or ask their family if that was appropriate,
because those people did not sign up for that crazy ride.
The truth is is that you've gotten into that situation
it's probably a pattern of bad decision making
that you need to figure out and solve first.
I just don't think it's appropriate.
Now, did my brother remortgage his house
to build his home building company?
You betcha.
Was he a single person at the time when he owned his house?
Yes he was.
So that's different.
I really think, when it comes to it,
you need to get permission from other people
that are gonna be impacted when taking that risk.
Instead of putting your whole house mortgage,
maybe take $10,000 out and you invest it
to try and get some early customers.
You cap it at that, you focus on that,
and that is the test, it's a compartmentalized thing.
It's not going too far and stretching yourself.
I get some people, again, they just wanna make it feel
like I'm all in, and all this stuff.
Look, if you've got a job, work at the job,
do the side hustle, get to about $10,000 a month
in revenue, and then make the switch.
That's just the truth.
A lot of people talk about all this risk, hustle stuff.
I'm giving you a framework to better
way think about it so you can stop, unfortunately,
inflicting pain in other people's lives
that care about you that they didn't sign up for.
The third is try to start a business
that's within your magic zone.
I learned this from John C. Maxwell,
one of the top leadership experts in the world.
He talked about it's not just enough
to get outside of your comfort zone,
but you need to get within your magic zone.
You need to get into an industry
that you love, that you understand,
that you feel like that is my calling in life.
Not just do something because you
think there's an opportunity.
Which brings me onto the fourth aspect of it,
is what wrong do you wanna right?
If you're getting into business,
don't tell me, "I think there's an opportunity
"in the market for this business."
That is the worst way to start a company.
Sure, you wanna find a trend.
Sure, you want it to have opportunity.
Sure, you wanna have maybe a partnership
to get you early distribution.
Some kind of unique, unfair advantage in that industry.
But to just do it for pure financial reasons is the craziest
reasons to take risk in your business.
I always say, tell me the wrong that you wanna right
and that needs to be the underlying reason
that you're getting into this business and taking the risk.
That, to me, those four areas, right?
So one is the horizon, 20%, like where do I wanna go
and is this just a little bit further
than my capabilities and I'm stretching myself?
Two is other people in my life that I'm impacting
in that decision, don't put them in the harm's way,
the risk, changing their lifestyle
unless you get permission from them.
Three is the magic zone.
Make sure you're outside your
comfort zone within your magic zone.
The fourth is what wrong in your life do you wanna right?
I wanna ask you guys below, in the comments,
I want you to leave me a story
and let me know a story of the biggest
risk that you took in your life.
And if you guys answer them there,
I'll leave my own personal one.
There's so many great things
but they all follow this pattern.
I just wanna give you that framework
so that you guys don't go out there
and obviously make decisions that might
hurt other people or hurt yourself,
or cause you to lose everything
you've ever had because that's just
not a great way to get into business,
'cause it might stop you to keep
trying again if that one fails.
So leave me a story below in the comments
with your biggest story and as per usual,
I wanna challenge you to live
a bigger life and a bigger business.
I'll see you next Monday.
If you like this video, be sure to subscribe to my channel
where you will get other videos on how
to start and grow your business.
Then also I'd encourage you to join
my newsletter where I send out exclusive invites to events,
free training videos, and community contest.
And if you're roarin' to get going and you want more
content, be sure to watch these couple
videos I've got queued up for you.
I will see you next week.