Wednesday, November 28, 2012

No Risk - No Business - No Wealth Creation

Years ago when I served on our Home Owners Association Board, we had to shut down a kid's lemonade stand because it was on one of our busy common area streets and was causing a road hazard as cars stopped to buy a glass of lemonade.   This 10 year old kid had invested his time and resources, or more likely his parent's resources, to buy the raw materials to make lemonade, only to lose his whole investment when our HOA Board shut him down.   

I hope the lesson learned by the kid was do your homework before you risk time and money, rather than never run a business again.   This CEO Blogger has been a risk taker and entrepreneur my entire life.   I have signed my name more times than I can remember, beginning with the first investment condo that we bought when I was 29 years old to all sorts of other property investments, loan guarantees and the starting of new businesses.   I like to think that I take prudent risk based on 33 years of business experience.  

But I know that without taking risks, there is no business and without business, there is no wealth creation.  The American dream is predicated on Free Market Capitalism and people taking risks, which is the basis for innovation and success.   And while Free Market Capitalism results in boom and painful bust cycles, it has created more wealth, for more people and a higher standard of living than any other economic system in human history.  

Even so, Risk Takers don't just arise by accident.   Risk Takers are the product of nurture and nature.   Parents create Risk Takers by encouraging creativity, independence and sometimes crazy ideas when their kids announce them; rather than teaching kids to be fearful about everything that happens in life.   While my dad was indifferent to my new ideas, my mom always knew that when I said, "Guess What", I was about to tell her of my latest idea, or plan.   Never once did she say, don't do it; though she always said are you sure you want to go down that path.   The decision was always mine from a very young age.  When I said I am going for it, she always encouraged me, without knowing it, to be a Risk Taker. 

Clearly, in addition to my mom's encouragement, I inherited the Risk Taker gene from my immigrant grandfather who came to America with nothing and lived the American dream as a business owner.   So the nurture, nature component is critical to risk taking.   Most people are not Risk Takers because they fear failure.  Thomas Edison failed many times before he invented the light bulb, as is the case with many entrepreneurs.  

Certainly, not every business I founded was a success; but enough have been successful to insure a life time of business expansion.   I was the kid with the lemonade stand and the lesson I learned was what Winston Churchill always said, "Never Give Up, Never Give In" and success will find you.  Without risk taking, there is no business and no possibility of wealth creation. 

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