How to lose the right way

There is a great beauty in being creative within the constraints of circumstances. Its not always possible to avoid losses in business, but there can be guidelines that we follow to not fall prey to losses that are easy to avoid. Subsequently the benefit of avoiding easy losses gives us the opportunity to only lose in situations where there is a greater chance of learning valuable lessons. These lessons far outweigh the costs of learning from them.

The term loss here is used somewhat loosely. It could be a loss of time, effort, customers, traction and money to name a few.

So without further ado, I present to you guidelines that help us lose the right way:

Don't start with a Hail Mary Pass

I often see individuals and businesses attempt an all or nothing move before giving other viable strategies a fair try - in most cases there are strategies available that would have been simpler to plan, cheaper to execute and have a higher probability of success. Unfortunately, too many people with little to no knowledge of risk management have convinced people that high risks have to be taken to get high rewards.

There are times when a Hail Mary pass is just what you need, but always eliminate all other possibilities before.

Always know what you can lose

Knowing what you can lose trumps knowing what you can gain on any day of the week and even more on Thursday and Friday.

Analyzing and fully understanding the risks of a particular strategy or investment is not the same as negative thinking. At best it'll make you a good risk manager and at its worst you'd be considered cautiously optimistic.

That doesn't mean that what you can win is not important. I have personally found the best way to execute on this is by knowing the relevant batting average and minimum risk-reward ratios.