April 20, 2009

One of the challenges many small businesses face these days is trying to figure out what to focus on. There’s never a shortage of ideas, but these days, resources can be somewhat constrained — and taking a big risk can be quite scary. Over at the New Yorker, James Surowiecki points out that even while businesses that doubled down and took risks in recessions have a history doing really well, it’s still quite a scary proposition — not because of the risk, but because of the uncertainty. Risk is understandable, but increased uncertainty makes people balk. But, that doesn’t mean you shouldn’t take calculated risks, even knowing they might fail. It’s just figuring out which of the many risks you should take.

Just today I saw an article about a company that is making hybrid Hummers. Yes, they are taking GM Hummers — perhaps considered the most fuel inefficient cars in the world — and converting them into hybrid vehicles that will be able to get approximately 100 mpg. A part of me thinks this is insane (and that if you drove one, you’d need to paste a huge banner to the back telling people: “hey, my Hummer doesn’t guzzle gas, so leave me alone”).

However, the more I thought about it, the more I realized that this is exactly the sort of “risk” businesses should be looking at these days: how can you take something that seems like a “bad idea” given changes in the market, and look to flip it to use it to your advantage. Consider it business jujitsu. It can be difficult to properly identify what your real strengths are in a topsy-turvy economy — but the weaknesses of others is often pretty clear.

So, the challenge is taking those weaknesses and turning them into your own strengths. Hummer is a sign of a vehicle that guzzles gas? Make it fuel efficient. You’re a musician and people are downloading your music? Use it to your advantage to bring in new fans to buy other goods.

Those are the type of “risks” that aren’t nearly as risky as people seem to think they are. What you’re really doing is taking advantage of a market opportunity, and leveraging where the market is heading, rather than trying to go after a totally greenfield market. So, as you’re comparing the various options on where to put your focus these days, look to see where your hybrid Hummers might be…

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