Risk and reward

I was on the phone the other day with my friend and somehow we got talking about business. He has started several businesses and is currently running a successful consulting business and doing quite well. He told me he has observed a principle that seems to always hold true: risk and reward – the more risk, the more potential reward. He told me a story of two painters, Ted and Bill,  going to the same university at the same time. They were both very talented and graduated with degrees. Ted took a secure and good job at a computer company as a graphic artist. This was not Ted’s ideal job but the safe bet. He has done well for himself and has provided a nice income and stability for his family. As Ted finds time, he still paints but more for himself than anyone else. Ted would still like to be able to make a living as a painter but probably doesn’t see how.

Bill, took a big risk. He moved his family to a small town where he could rent a studio for very little money. Bill’s family was very poor for many years and went without many comforts as Bill developed his style and skills. Now, Bill is a very successful and famous painter making a great living and doing what he loves to do.
Now, the purpose of this post is not to explore the validity of this principle. I believe it is true. Think of sports gambling. The more a team is an underdog, the more money you make if they win, but the chances are much less likely. Anyway, I want to evaluate if I am taking enough risks in my life to get the rewards I want. Also, although this can apply to areas outside of work, I am currently only thinking about the work aspect.

For most of my career, I have wanted to start my own company and be self-employed. Through all this time, I have always held a full-time, regular, safe job. I have taken my little shots at self-employment by working late nights and on weekends. I say little because I never go big. I see a place where I can make some money, so I give it a try. In most cases, I make some money. In some cases, I make OK money, given the time investment, but I have never been able to figure out how to take it to the next level, or I have been unwilling to leave my safe place and commit the additional time and resources to see if it will work out. So here I am wondering if time is slipping away, where, instead of being in my safe place and doing something that is currently challenging and a little fun, I could be doing something challenging and a lot of fun.

Year after year I keep telling myself that I just need a few more years to save a bit more money and I will be at a place where it will be less risky to go off on my own – I am hedging my bet. For better or worse, this is what I am doing. The problem is, if I wait too long to take my shot, it might be too late for me. What if I get sick or injured? What if my life changes in a way that makes it far less likely that I will be able to do what I want in a few years? I am willing to be patient, but I don’t want to wait so long that I just lose heart or one day I wonder where my life has gone and why I didn’t do what I really wanted to do. Now, in fairness to myself, part of the problem has been me not really knowing what I really really want to do. I think if I knew, I would have taken the plunge by now.

I think I know how I feel now, but let me go dig up a few quotes and see if any of them hit the nail on the head for me:

  • Great deeds are usually wrought at great risks.- Herodotus
  • Risk – If one as to jump a stream and knows how wide it is, he will not jump. If he doesn’t know how wide it is, he’ll jump and six times out of ten he’ll make it – Persian Proverb
  • If you don’t risk anything you risk even more. – Erica Jong
  • Our lives improve only when we take chances – and the first and most difficult risk we can take is to be honest with ourselves. – Walter Anderson
  • You miss 100% of the shots you never take. – Wayne Gretzky
  • Far better is it to dare mighty things, to win glorious triumphs even though checkered by failure than to take rank with those poor spirits who neither enjoy much nor suffer much because they live in the grey twilight that knows neither victory nor defeat. – Theodore Roosevelt
  • It seems to me that people have vast potential. Most people can do extraordinary things if they have the confidence or take the risks. Yet most people don’t. They sit in front of the telly and treat life as if it goes on forever. – Philip Adams

Wow, originally I wasn’t going to go for quotes today because I figured we all know it is good to take risks, but I am really glad I did. These quotes are just what I needed to solidify my thinking. In fact, I was going to say before I looked for quotes that I must be happy with where I am or at least I am patiently waiting, but you know, I don’t feel this way now. I feel like I am letting too much of precious life pass by thinking I am doing the right thing. I am not seizing the day.

OK, I am not going to address this in a one-hour blog entry, but I certainly have started something. Resolution: I am going to take a lot more steps than I am currently taking and move at a faster pace to get somewhere. I think right now, I would rather charge forward with my best guess at a direction than to wait until the direction is clear, because I am not sure it will ever be as clear as I want.

ADDENDUM: Just for clarity, I do want to say that not all risks bring great rewards. You can take a huge risk by giving money to someone with no experience in investing and tell them to invest it. The risk here is huge, but the reward would be no greater than if you took a much less risky route with an experienced investor. Now, some might say doing this is not a risk, it is just stupid. I agree. Maybe a better way to say it is that great rewards come with great risks, which is not the same as great risks mean great rewards.

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September 18, 2010Permalink Leave a comment

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