Every business owner thinks their business is anti-fragile until reality slaps you in the face when you realize that your livelihood totally depends on that business.
If your business shuts down today for any reason, your income will come to a standstill.
It may take some time to start a new business or a new income stream.
It will take...
1) much of the investment from your savings,
2) a bit of uncertainty, and
3) time,
...till things get back on track before your savings burn out.
Be prepared
How can a business owner be prepared for such uncertainties?
You need to understand the concept of "Anti-Fragility". Anti-fragility depends on the "Failure Risk %" metric. It can be easily understood from an engineering perspective.
Consider a bridge between two river banks.
Scenario # 1:
A single column supports the bridge. If the column breaks. The bridge collapses.
This is called a "Single" Point of Failure.
Where things break at the first instance of failure.
Failure Risk % = (1 ÷ No. of columns) x 100 = 100%
Scenario # 2:
The bridge has two columns. If a column breaks, the bridge is supported by the other one.
The bridge collapses when the second column fails.
Failure Risk % = 1 ÷ (2 columns) x 100 = 50%
Now imagine scenarios #3, #4, #5, and so on, adding one column to each consecutive scenario.
3 Columns = 33% Failure Risk
4 Columns = 25% Failure Risk
5 Columns = 20% Failure Risk
Here,
the bridge = your livelihood
the columns = your income streams.
Decreasing Failure Risk %
We can see that the Failure Risk % of our livelihood decreases with the increasing number of income streams. Work on increasing the support columns of your livelihood by increasing the number of income streams.
If you have one working business, divert part of your funds and energy to start a new business or income stream. Let it grow slowly alongside your current business. Once it stabilizes, move on to the next. The twist here is that there's a limit to how much time and energy you can dedicate to each support column.
Your workload will increase with each added income stream. This is where you need to develop the skill of reducing the owner's dependency on the business.
In conclusion
To be an "Anti-Fragile" Businessman,
1) Decrease the Failure Risk % of your livelihood by increasing the number of income streams.
2) Learn dependency reduction to manage these points better.
This will help you overcome the anxiety of uncertainty and live peacefully.
Where, Failure Risk % = 1 ÷ (No. of income streams) x 100.
What is your Failure Risk %?
That's all for this week.
See you next Saturday.
Want to know where you are the bottleneck in your business? Take the free Business Dependency Test!
