Investing in loss – A proven small business growth strategy

Doing Things The Hard Way is Easier Than Any Shortcut

Investing In (Initial) Losses

When we look for a proven business growth strategy we are expecting an upside. A gain in clients. An increase in profits and avoiding a loss. An improvement from where we are now. The three main investment areas in our lives are financial, intellectual or physical. This desire to grow, improve or change is a key motivator for human kind. But it’s a complex process that is fraught with doubts, fears and confusion. Making the decision to invest in losses can be hard. We are always searching for the lowest risk with the highest potential reward. Proven business growth strategies we can follow.

The Single Trigger Required For Investing

Every investment is about the future, and the future is unknown (by everyone). Every investment is uncertain and the outcome isn’t guaranteed.  So what makes people invest in something? On a basic level we need one thought or feeling to invest. Confidence. When we are confident in the future we invest. If we are pessimistic we cut back on investment. How and what influences this confidence is hard to define. Our mindset needs to be confident in order for us to reach a decision. One that overrides any doubts or uncertainty. Often that confidence is given to us from salespeople or other outside influences. Other times we come to the conclusion ourselves via “instinct”. That instinct is usually a processing of all the information subconsciously. Which then spits out the correct answer, without us being aware of the whole process. 99.9% of small business owners start with a loss – but we forget this.

The Mental Artificial Ceiling Stopping You

One of the biggest mental barriers we face in finance and business is the attachment to a high water mark. This new ceiling becomes both our mark of what is achievable but also a figure that we become attached to. We then compare all other results against this number. Many of which don’t measure up. I’m sure we’ve all experienced the feeling of holding onto a stock, property or a personal item too long. Then when we went to sell it was “worth” less than we had paid. The negative attachment around holding on and trying to gain back our paper “losses”.

One of the key reasons for this is that we attach far more significance to losses than wins known as loss aversion. Knowing this bias is half the battle. It allows us to be more rational and to regain the confidence to reinvest after a loss or setback.

Only when the tide goes out do we realize who is swimming naked. – Warren Buffet

 

Comparison between each stage we face

 

No pain, no gain

Change is hard. Which makes us unwilling to invest the time and effort into changing. When we look back at all our accomplishments, we realize that they came via change. The willingness to invest in learning a new process. This understanding can become a filter. Enabling you to run each “new thing” you want to achieve through it. Asking yourself one question. “Am I prepared to invest in loss?” Once you answer this question with a yes you can move one step closer to achieving your goal. It’s kinda like the gambler’s folly. Worrying about if the bet will win. The time to do all the worrying is before the bet’s placed. This is the only time you are in control. Once you’ve given up control you should also give up worrying.

Time In The Market

Investors have a saying that success if driven by time in the market not timing markets.

The only path to grow is to continue to invest in losses. In business and in life there are no certainties. Business growth strategies change constantly. Growth is never linear. If you invested in one stock and it went down does that mean that you will never invest again in any stocks? Each loss is a way to both learn and test an idea or an assumption. A chance to improve both our decision making and our ability to handle losses. Take a look at your current results, your trajectory and the gap between where you are and where you thought you should be. If the gap is significant then it’s time to consider investing in loss a little more.

Learning Doesn’t Happen Until Something Changes.

To improve our learning skills we must adopt a more humble attitude. Let go of the ego and allow ourselves to become both curious, and willing, to take on new information. Whenever we are confronted with a cliché or simple idea we tend to quick pronounce “I know that.” Asking someone to explain it back to you often results in the realization that they don’t understand.

So if your existing business growth strategy isn’t working for you consider something more daring.

Taking a step back will allow you to make the next leap forward. Unlearning by deconstructing something. Before reconstructing it in a way that not only provides real learning but a change. Because learning doesn’t happen until something changes. As Ryan Holiday’s famous books says The Obstacle Is The Way.  It’s time to review your current reality and decide what needs to happen for change to occur. Knowing that your investment in loss will pay off in the long run.

About the Author:

Ronan Leonard is a Mastermind facilitator and Mastermind teacher. Connecting entrepreneurs and small business owners together to create the perfect Mastermind groups or teaching self-employed professionals how to run their own groups. Small business owners are often overwhelmed with to-do lists and need impartial advice to get the right support to help them achieve their goals.

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