There is a famous story by Napoleon Hill. It goes something like this:

There was a cat who liked to sit on the stove. One day he accidently sat on the hot stove. That cat never sat on the hot stove again. In fact he never sat on the stove when cold either. He simply got out of the business of sitting on stoves… He ‘over-learned’ from experience…

So why recap this story? Last week, I was treated to lunch by two successful business owners who both appeared to share traits with the cat in our story and herein lies the truth of the past few years.

Regardless of industry, the overwhelming majority of us have had to adapt to how we do business. We’ve seen our markets move, the strength of business relationships tested and the need to be less cavalier about spending.

The danger of over-learning from our experience is we begin to see everything we do as a prelude to disaster and walk the cautious path. We all know this path, the prudent and careful one, forgetting that it was the opposite of such behaviour that lead to our entrepreneurial desire and success. So we willingly move from one extreme to the other under the justification that we’re in tough times.

So what’s the result? We create a business that is starved of success, creativity and most importantly joy. With the green shoots of recovery becoming evident (go on, I dare you to take off those pessimistic specs and take a REAL look), we are all in danger of being the cat that tentatively goes back into the market place, that slows growth and confirms our worst fears, we’re not ready. We’ve forgotten what a calculated risk is. We just see the problem in things.

So how to improve? How to find a balance between caution and the cavalier? Here are three tips:

1. Write down your optimistic and pessimistic expectations for the task ahead.
2. Clearly write down the risks to success. Now this can be hard to see. We can be in denial about the real risks, so explain it someone who is not directly related to you business. Someone’s whose opinion you trust. If you can explain to them the task without using jargon, then you are more than half way there.
3. Look at both the Profitability and the cashflow requirements of the task. These are different. If a new venture/product/service has a high gross profit but the customer payments are delayed, you could find yourself out of business.

 Lastly as we say at Templeton Green, in business as in life, we have choices, what will you choose today?