How to craft Risk Roadmaps to hack the Science of Startups
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Most startups fail. That’s reality.
Starting a new business is inherently risky. There will be many factors outside your control, and you will inevitably make mistakes with the factors you can control.
But just like most new business will fail, a certain percentage of them will succeed.
hat’s also reality.
There is literally nothing you can do to prevent new businesses hitting the market each year and changing the game as we know it. It’s going to happen. The successes are as guaranteed as the failures.
We all know Elon Musk. He is master at turning near-failures into world-class success stories. Both Tesla and SpaceX are now multi-billion dollar companies, despite each being within a year of failure before having a massive turnaround.
But what many don’t realize is that Musk’s near-failures were not a surprise. In fact, he literally launched his companies to tackle those potential failures.
In the case of Tesla, Musk knew that the #1 problem with electric cars was the inconvenience and impracticability of current battery technology. He knew that for electric cars to work, they needed a range of 265 miles (426 km) and the ability to recharge in only 20 min.
If that didn’t happen, nothing else about the car mattered. The business would fail.
So Musk launched his business with the risky assumption that he could produce the necessary battery specifications to sell cars before his available capital ran out, and while he was just weeks away from that happening in 2008, ultimately, he succeeded.
The story was very similar with SpaceX. Musk launched the company knowing they had enough capital for 4 launches. If they couldn’t successfully launch a rocket by the 4th try, the business would go bankrupt and Musk would fail.
The first 3 launches failed. The 4th succeeded. SpaceX is currently valued at $10 Billion.
They key here is that Musk didn’t shy away from risk. He tackled it head on with a precise view of his chances of winning, the risks involved, and the payoff if he were to succeed.
So the question becomes, how can you utilize this knowledge to give your business the best chance at succeeding?
Don’t mistake risk as simply the possibility of working hard without a payout.
That’s the consequence of failure.
For your company to succeed, you need to identify the one factor that will most influence your success and then channel all your resources at solving that problem and eliminating that risk.
To do that you need a risk roadmap.
A risk roadmap provides you with a crystal clear understanding of what it will take to succeed and what is standing in your way. To create your risk roadmap, follow these steps:
Step 1: Identify the #1 risk standing between you and success.
Identify the “make or break” factor dictating the success of your business.
Step 2: Think of an experiment you can run to try and reduce that risk.
How can you gauge this risk or eliminate it altogether before going all-in on the business?
Step 3: Run the experiment.
Measure your results: set an ‘expected outcome’ before you start, and see how ‘actual outcome’ measures up against that
Step 4: Rinse and repeat.
If you can eliminate the biggest risk, repeat the process with the next big risk on the list. If you gauge it and like your odds, focus on eliminating it before you do anything else.
So where do you go from here?
That’s the end of our lesson today, but as always, we have more available for you. We’ve created a full guide detailing our systematic process for creating risk roadmaps for any business.
This guide goes even deeper than our previous ones. It’s a bit more like a workbook, taking you through each stage of identifying and then targeting risk in your business.
Do you think your startup can benefit from a great risk roadmap? Click below to learn more about how we might be able to help you.
To building business empires,