Market Risk or Business Risk which one do I choose?
In order to make money we need risk. 100% safety pays what a United States Treasury Pays. That is about 2.75% per year. If you saved 1 million dollars and purchased a United States Treasury the most you could hope for is $27,500 a year.
Think about that.
Last time I checked that is not enough to support a family. So people must accept risk in order to achieve financial success. What type of risk is the best to deal with? What type of risk is the worst to deal with? That question is based on preference. I know people who love to go big and play the market. There are success stories of penny stock purchases climbing to over $5.00 a share. Buy a stock for $0.15 a share and watch it soar. That’s one big return. The same applies to someone who started a business with just $10,000 in their garage. Now that business brings them $100,000 a year in earned income. Balancing risk long term is definitely a requirement to be successful.
Professional Entrepreneurs are not influenced by market risk or business risk. Time is money. Earning money requires risk calculation. Professional Entrepreneurs focus on earning money regardless of the risk profile. Market opportunities can provide fantastic earning potentials. Market opportunities require revenue for growth. Profitability is not the central concern. Increased revenue means a higher stock price. Higher stock prices mean more investment capital (Think Lyft, Uber, et cetera). Business opportunities require profit for growth. Large revenue numbers with no profits result in businesses closing. Interesting how that works right? Both are the opposite of each other.
The risk is greater depending on your odds of playing a situation out. If you are relying solely upon one transaction to turn profits…choose business. If you are just providing a resource to drive revenue…choose market.
Risk is nothing but odds calculations. Play odds that are in your favor. I go in when I am at least 70% confident what I am doing will work. Notice I said 70%. That means 3 out of 10 things will fail. Don’t let social media trick you into delusion. Not every deal we do will work. Treat each entrepreneurial deal you do like a football season. Measure it over 10 games. Try to walk away with a 7–3 record. Remember I am 7–5–1. I am not 13–0.
I utilize both market and business opportunities to earn compensation. There is a third category. That category is called “asset” opportunities. These opportunities require fundamental analysis in things such as: gold, real estate, technology, stocks, bonds, et cetera. The third category I recommend to stay away from when first starting. Asset values are influenced by external conditions that require time to learn. Professional environments require mentorship in technicalities. If you want to enter an asset opportunity take the time to spend 1–2 years being mentored. One of my losses came from failing to do this. It is a hard lesson I recommend avoiding.
My first asset opportunity was real estate. My last asset opportunity was zero coupon bonds sold at discount. Hard stuff. When you understand all these risks you can create opportunities with solid stakeholders. My current stakeholders I prefer are governments. Governments are in place to improve their citizens’ lives. Each country needs something. Some need food. Some need electricity. Some need roads. Each one of those segments is a business industry. Governments are reliable. Governments may pay late but they always pay. I like those odds.
Figure out your stakeholder and play your odds. Do you want Business risk or Market risk? The choice depends on what game you want to play.
Revenue or Profit?
About Christopher: Christopher Knight Lopez is a Professional Entrepreneur. Christopher has opened over 7 businesses in his 14-year career. Christopher’s purpose is to take advantage of various market-driven opportunities. Christopher is a certified Master Project Manager (MPM) and Accredited Financial Analyst (AFA). Christopher previously held his Series 65 securities license. Christopher also has his General Lines — Life, Accident, Health & HMO. Christopher has managed a combined 286mm USD in reported Assets Under Management & Assets Under Advisement. Christopher has work experience in 29 countries, raised over 50mm USD for various businesses, and grossed over 7.5mm in his personal career. Christopher worked in the highly technical industries of: biotechnology, finance, securities, manufacturing, real estate, and residential mortgages. Christopher is a United States Air Force Veteran. Christopher has a passion for family, competitive sports, fishing, martial arts and advocacy for entrepreneurs. Christopher provides self-help classes for up-and-coming entrepreneurs. Christopher’s passion to mentor comes from belief that entrepreneurs need guidance. The world is full of conflicting information about entrepreneur identity. See more at www.christopherklopez.com