The rules of risk and the business of web design.
In the business of web design (any business really,) there are two fundamental rules of risk you can use to evaluate whether or not you should take a particular risk:
- If what you are attempting do does not work out … will it kill you?
- Does the potential gain justify the risk?
THE FIRST RULE OF RISK
There is an old gamblers expression someone taught me years ago that sums this up nicely:
‘Don’t go to the track with money you can’t afford to lose.’
This rule tells you, that you should not take any risk that would kill your business, if the risk should prove unsuccessful. Keep in mind that most business projects fail; yep, most business ventures, new products whatever … fail!
All-or-nothing type gambles may work once or twice, but eventually something will screw up. If you are one of those guys/girls who puts it ‘all on the line’ everytime, you are doomed to struggle the rest of your life.
As a web designer building a business, you need to learn to take calculated risk that if they should fail, you will be able to continue along as you did before.
For example; lets take a look at a classic situation: the big contract.
Many times when people start a new business, they want to go after the big contract with the big clients right away.
… This is a fatal mistake because of a few things:
- Big business will almost always only deal with big companies … not small start-ups.
- Big clients and big contracts will cost you a lot of time just to make proposals and bids – this cost a lot of precious time where you could be earning actual money doing work for small clients.
- Big business can be tricky to deal with: they know they’re big and so they have a tendency to push their weight around.
Trying to take on a big contract is a high risk decision because chances are you will not get the contract. Also, the process of trying to get it will cost a lot … possibly your business. It is not worth the risk.
You are better to go after byte-sized contracts and slowly build up a stable of clients that will help you develop your web design work-flow and your financial base. In time you will be able to tackle the larger projects knowing that if you don’t land them, it won’t sink you.
Stefan Mischook
www.killersites.com
www.studioweb.com
August 21st, 2007 at 2:35 pm
Starting up my new web business has been exciting and difficult. I have stomach aches thinking about success and failure. Sometimes the successes are as frightening as the failures.
I am exited I found your web site.
Kathy
September 24th, 2007 at 10:51 pm
I landed a “big” contract a while ago, and like you said. It took up all my time and money. I didn’t end up making much profit on it at all and I had to turn down a couple other smaller contracts (which would have turned in more profit) in order to keep up with the demands of the “big” company.
Totally agree!