In one of his interviews, best-selling author of the Rich Dad, Poor Dad series Robert Kiyosaki talks about how he fared in setting up and running his businesses. In all, he says he started nearly forty business. Some lasted a few weeks while others survived more than a decade. His first really successful business was the Velcro wallet venture, which made millions in sales. However, the situation started changing and Robert did not take notice. The wallets started losing popularity and sales began to slow down. By the time Robert noticed the looming collapse, the business had lost a lot of money and was bankrupt.
Robert took several months crying about the collapse of his business. Eventually he approached his mentor, whom he calls rich dad.
Rich dad advised him to apologize to investors who had put money into his business. He also told him to look at the important lessons learned from running that business. Robert recalled one important thing; his financial team failed to disclose to him the true state of the company’s financial performance. Maybe Robert did not ask for detailed information in the first place and the accountants did not want to disappoint him with bad news. The business was in the red without the owner knowing.
If Robert had scrutinized the financial performance reports earlier, he could have steered the business into a different direction. Or he could have realized that the venture was beyond rescue and abandoned it before incurring heavy losses.
The belief that failure is not an option is a fallacy which has steered many organizations, and even countries, into serious financial disasters. Failure maybe the best option. There is no use flogging a dying horse, it only worsens the outcome.
If you hear corporate risk executives discuss strategy, they talk of worst case scenarios and catastrophe reports. They ask about what is the worst that could happen if they take a particular course. They always hope for the best but prepare for the worst and they are not afraid to change a wrong course.
In these turbulent times, you need to regularly review your strategy, study your financial situation, project the future and change course where necessary. Doing the same thing when the environment and situations are changing will lead you nowhere but to disaster. Think about it and let me have your feedback.
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