The program director at an entrepreneurial class I taught recently said, “no one speaks to us so frankly about failure.” I then had fun with a colleague discussing that thought and it made me decide to postpone the second of three “Dear Reader” blogs regarding “empty abundance.”

And the lesson not only applies to entrepreneurs and would-be entrepreneurs, but all of us.

It’s never a problem to find entrepreneurs with enthusiasm for their idea, whether feigned or real. I don’t need to prompt them to tell me how they will succeed.

I try instead to teach them how to manage the possibility of failure.

Hope is not a strategy. Yet hope is the basis on which most new businesses are started. No wonder 95% of new ventures fail within 10 years.

I’ve learned before taking any major leap, such as starting a business or just taking a risk where I work or volunteer, to consider the worst possible outcome of that action. With that strategy, I’m able to decide BEFORE I take the action whether the worst case is acceptable to me. More importantly I can decide how I would manage that outcome if it comes to pass.

When Alice and I started our first business in 1988, we decided our worst case was that we might have no profits in the first 24 months. We estimated that to live and run a consulting business for 24 months without any profit would cost up to $120,000.

Our decision was then to continue to rent everything and if the worst happened, we would take a 10 year loan for $120,000. We agreed that if that was the worst case, we could weather the storm.

Here’s why that’s so important. Over the next four years (yes, we once got within $500 of $120,000 total debt) when we’d lose a big client and I was having a panic attack, Alice would say “Tim, what’s the worst case?” I’d respond, “Oh, yeah, I have to go get a real job and a huge loan.”

Would-be entrepreneurs are taught to be risk-takers. I don’t believe that. The ones who actually survive are not risk TAKERS as much as they are risk MANAGERS.

Each time I’ve jumped off a cliff, I’ve had a good idea about the worse place I might land and what bones I might break if the worst happened. I also knew what the surgery would cost.

The best way to succeed is not to hope and be passionate, although a good attitude certainly helps.

The best way to succeed is to plan for failure.

Peace.

Tim McCarthy