Monday, March 25, 2002

Daily Grind


Be willing to take a chance

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        All business owners ought to say this one aloud a couple of times a week — the risks scoundrels take — but not because they are scoundrels.

        The little hitch that is heard mid-sentence is like the pause that many business owners feel whenever they think about the risk of a new business approach or niche and what that perceived risk could mean to their company.

        Risk consultant Dwight Kingdon, of Colerain Township, thinks that far too many companies avoid risk at a time when they should be embracing it, analyzing it, thinking about it, talking about it and, finally, acting on it.

        “A big mistake people make is they don't take the time and energy and money to examine risks beforehand,” he says.

        “If people take time to quantify risks and present what they find to management, some feel that their project may not get funded because there are too many risks.”

An example

        Mr. Kingdon, 41, has simple advice for his clients and others who are cowed by risk:

        Bring all risks to the table and quantify each one to gauge how likely it is that a particular misfortune will actually happen.

        “Everybody thinks risk is bad, that it is something to avoid, but a risk really represents a major opportunity,” he says. “But you have to mitigate the risk.”

        One great risk-taker in our region, who belongs in a Hall of Fame for Risk Takers, was the late Jack T. Maas Sr., scion of the JTM Food Group.

        When his company was little more than a small meat market and single cash register, Mr. Maas already had big plans, and usually those plans involved plenty of risk.

        It was a time when his company's revenues was measured in tens of thousands of dollars.

        Within a decade, those revenues could be measured in tens of millions of dollars.

Focus on potential

        “Prudent businesspeople always plan somewhat for a worst-case scenario,” said Jack T. Maas Jr., vice president of sales for the firm, which is expected to have 2002 revenues in excess of $40 million.

        “If you're going to make an investment in a building or piece of equipment or new business venture, you look at current earnings.”

        Those numbers have to be balanced against the cost of the investment and can provide a cushion, he said.

        “You figure that if you make the investment and even if expectations are not fully realized, at least you can make payments on the expansion,” Mr. Maas said.

        He pointed out that his father also realized that it was never a good idea to look just at costs. That could be self-defeating:

        “Another thing Dad always said was to focus on the profit something could make. If you get bogged down in costs, you will lose sight of potential.”

        Risk should never be just a gut feeling, Mr. Kingdon said. “Instead it's a formal, disciplined approach. Two or three hours of good risk assessment can save months, and that is big money.”

        E-mail jeckberg@enquirer.com. Past columns at Enquirer.com/columns/eckberg.

       



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