I am an online marketer. Also a programmer. And for many years an active investor. Inactive now, but still very much connected with the financial world.
Risk is not perceived the same by everyone. What is avoided as risky by some, is regarded as an opportunity by others. From my investor’s role, I know a lot about risk, and also assume some calculated risks in my actions. I had my share of plain stupid actions over the years too…
Risky decisions can draw great rewards but also great losses. Calculated risks should turn out profitable, on average. Which means you know some actions you take might lead nowhere or even generate loss, you just don’t know for sure which ones at first, or you’d dismiss them altogether. You just count on being (really) profitable on average.
If you keep counting losses day after day, it is an option to lower the threshold for your risk. Here are some examples from the investments world, and not only:
- higher leverage usually means riskier, so lower leverage is what you seek out to reduce your risk
- make sure the business is fundamentally solid
- sometimes you need to take into consideration the opinion of experts. For rating agencies in financial world, there’s is a threshold called investment-grade, with everything below being junk-rated. If you want safe(r) choices, select investment-grade instead of junk-rated. Parallel to online world: is the business reported as scam often? Do you find the arguments for being “rated” as scam valid?
- will the particular product or service type sold by the business you’re considering still be needed 20 years from now? Ok, maybe I’m stretching… How about after 10 years into the future? So, to be on the safe-side, choose evergreen instead of products built on thin air.
Taking a calculated risk when joining a business means you evaluated it and you decided it’s worth the risk of pursuing forward.
There are also two golden rules that are being communicated to you when you want to invest in something like stocks or on Forex (sometimes hidden in the fine-print). But they apply in other business choices:
- The risk is yours.
- Don’t invest using money you can’t afford to lose.
The big question here is: for all the businesses we join taking a calculated risk that fail, would it had been a better choice to join or stay the course in a proven business with a lower risk? That’s a question an addicted risk taker will dismiss without a second thought. He or she is also the type of person who will get rich quick and / or become broke overnight. A calculated risk taker does something called risk distribution. Which means for every failing business he’s involved in at a given time, he has others that soar or at least do well.
But here’s one thing a failed business doesn’t have, even if you get out in profit: the power of compounded interest over time. When a business fails, its history ends. When that happens, profitable or not, if you join another business, you start from scratch.
As an online marketer, I have promoted businesses that failed (or their future is now blurry, at best). Calculated risk or not, being in profit or not, I’m not comfortable with that. Why not? Because others may not have the same tolerance to risk that I do, and all the potential risks for the future we see need to be thoroughly explained, which we rarely do as marketers. Because time is the most valuable commodity we have and if we waste it, doesn’t get back. Because someone trusted me enough to join. And the business failed.
You may argue that decision is yours and theirs. Each assuming his own risk, as I mentioned in the golden rule above. But if you know more, understand more, from the affiliate’s point of view, is that wise not to share? Does that build trust or shatters it?
How does that fit with my core values? Not well. It’s said a great marketer can sell fish to a fisherman. I can’t, which is why I’m probably not that great after all.
If you’re a marketer, how do you handle these situations? Do you promote only evergreen products or also those with a short-term profit and life expectations? Do you explain the risks to your prospects? Anything else in disagreement with your core values?