One Bad Deal Equals Ten Good Deals

Have you ever noticed that drama people, those that welcome a life of continual crisis, can't seem to ever escape their problems? It's sad to watch a life full of crisis.

I think it can happen to all of us if we don't protect our downside. Getting involved with crummy people and bad deals is hard to dig out of. Take a simple subscription for cable. It's easy to sign up for. It's a lot of hassle and steps to get out of. There's a disproportionate aspect between enrollment and dissolution.

The same goes for relationships. They are easy to get into, but it is often an ulcer trying to unhinge from shady characters.

I often tell friends, "One bad deal is worth ten good deals."

That's a simple rule of thumb from business observations I have had over many years. If you work hard to avoid problems, build a boring business and be a little wiser to protect your downside, the upside tends to take care of itself.

So what about risk taking and entrepreneurship? I think that doing a bit of thinking to protect your downside is part of pushing against uncertainty. Throwing caution to the wind can be costly. Taking on what looks like a sweet upside deal without considering the costs can get you entangled in something like quicksand. The struggle to get out of a contract or undo the work you have put out into the world takes an immense amount of energy.

Furthermore, when we get vested in projects and commitments, we develop a sunk-cost bias that blinds our decision-making.

If I'm the cable company, I want you vested and emotionally committed. I want you paying your bill every month.

If I'm your business advisor, I want you to be smart and stay free so you can keep growing without friction.

Simply protect your downside vigorously. It will take ten good deals to overcome a bad decision, otherwise.