Why Entrepreneurs Must Constantly Reevaluate The Risks They’re Willing To Take

the punch card of life

You can only succeed as much as you are willing to fail.

Only recently did I fully grasp how much the level of failure I was willing to experience directly related to the size of the game I was playing in business.

It all started when I was chatting recently with a friend who has a completely different level of experience with financial failure than I do. As a trader, at one point he lost all of his money—$2 million—while trading.

This sounded nuts to me. A $2 million loss is unfathomable—my low point in business was $40k debt. But this made me realize it is scary only because it’s unknown. To this guy, $40k debt doesn’t even register. He lost 50 times that money and bounced back from it.

He’s comfortable betting at the $2 million level. I’m comfortable at the $40,000 level. And these different perspectives have profoundly shaped the way we approach decisions toward investing in our businesses.

What am I willing to lose?

Since I have bounced back from $40k debt I am willing to invest in ways that may put me at that level again. But am I willing to take a gamble on my business that risks putting me in a much deeper hole? Subconsciously, no. My previous failure has been my threshold.

But in retrospect, that failure has become one of my greatest assets. Without it, I wouldn’t have been forced to reevaluate my business model and pivot into what it is today. Having bounced back from that failure, I now realize that it actually made me comfortable with a greater level of failure than I was previously. Therefore, since failure has actually increased my risk tolerance, it has also increased my capacity to succeed.

The amount I’m willing to fail determines how big a game I am playing.

For example, in years past I’ve experienced sheer panicwhen we didn’t hit certain sales in a period of time. Or when a new idea didn’t prove fruitful six months later, we’d say it didn’t work. We’d feel fear and defeat, certain we’d made the wrong choice.

But after experiencing the bounce-back a few times I’ve learned that that’s just the life of an entrepreneur. I’m starting to realize that placing larger bets on my business by investing in consulting, education, support services and the like will allow me to play on a different field, and that I can’t really fail if I never give up.

And I will fail: these investments don’t always pan out. But when I was too scared to spend the money, for fear that it wouldn’t work out and that then I would be regretful about the lost money, I was also missing out on the opportunities for success that only come from playing a bigger game.

I was inspired to go bigger and take out a line of credit recently after re-reading Julia Pimsleur’s book Million Dollar Women. She shares her own experience of getting investment for her company Little Pim in order to play a bigger game. For my business, and the small, service business owners that I work with, investors are usually not interested because there isn’t a high enough return on their investment, but the philosophy is similar: you can get farther, faster with more money to invest in your business. If you’re confident in your ability to succeed and see a clear path to an ROI that makes sense (and refuse to give up) it’s a bet you should take.

I felt comfortable taking out a line of credit once I calculated that it would cost me at maximum $1,650 to borrow $30,000 from the bank for an entire year (at a 5.5% interest rate). I plan to invest in a variety of outsourced labor to free up my time to do bigger picture strategy and implementation. Since I forecast this investment will actually multiply my income by at least50% by the end of the year, the return on my investment dwarfs the expense of the credit line.

But it’s still a gamble, and the fear of failure is what stopped me from even considering it before. But with this new perspective on failure, I realized that if you’re not putting yourself in a position to fail, it’s an indication that you’re also not really trying anything new. Where’s the fun in that?

That’s not failure, that’s being an entrepreneur

Recently I had to pull a colleague out of the hole of defeat. She was out of cash and downsizing both her staff and office location. I could hear the fear in her voice; she felt like a failure.

Here’s what I told her, and need to remind myself constantly: This is what business looks like. Try something new and you will inevitably run into hiccups. It’s not going to go perfectly. You’re not necessarily going to make money right away.

But don’t forget that trying something new, stretching into new ideas, and testing theories is how unique approaches and innovative ideas are discovered. Want a brand that stands out from the competition? You have to be willing to test ideas that might not work to find the ones that do.

Muscle building

Not to mention, with every trial and every challenge, you are building the most important asset you have: your ability to keep going. And you are learning that so-called failure in the form of debt, or no sales, is not a permanent state. You are building the very muscles you need to succeed!

And while these ideas might be in the vernacular (and ubiquitous now that social media is flooded with inspirational quotes and gurus), I find that I am constantly relearning these lessons with each new challenge. We went into debt, and then we got out of it, and it was one of the most powerful and inspirational things that happened in our business.

It also sucked, but that doesn’t mean it was bad. I learned the critical lesson that going into debt does not mean going out of business. I learned that in the face of failure I am resourceful enough to pivot and build something better. And now I am even more likely to try new ideas and take risks moving forward because that level of failure is no longer as scary.

Be bold in your brand and own your message in the face of adversity

Investing more money in your business isn’t the only way to bet big. Betting big with your brand is one of the fundamental ideas I teach in branding small business, but the fear of being disliked often stifles business owners from going all the way with their brand. If you believe being disliked or misunderstood equals failure, your fear of failure is still stopping you. But do it anyway, and reap the rewards of attracting enthusiastic, loyal fans? That’s how failing can also be your biggest asset.

It’s only fear that holds us back from experimentation that leads to greatness. I write this article to remind myself to go for it. Because really, what’s the worst thing that can happen?

I encourage you to think of failure as a tool, and embrace boldness in your brand while understanding that hiccups along the way will actually make you stronger. My clients are often scared to embrace their true brand voice because they don’t want to scare anyone away. But it’s similar to the fear of losing money—the greater the risk, the greater the reward.

This post originally appeared on Forbes.com.
Artwork: “The punch card of life” by Steve Wasterval

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