Poker, like business, is a game of both skill and chance. Smart players eventually come out ahead, but even the best don’t win every round; armed with a solid strategy, they don’t leave the table following a loss.
Smart entrepreneurs play the same way. In fact, April 2016 U.S. Bureau of Labor Statistics data showed entrepreneurs were placing more bets on new businesses than at any time since 2010.
In other words, your company might be holding four of a kind, but that doesn’t mean it’s won. There can — and will — come a time when a scrappier, nimbler startup lays down a straight flush.
You might lose a few chips that round, but your company’s future hinges on what you do next: Do you give in to fear, throwing discipline and logic to the wind? Or, realizing that luck will sometimes spite you, do you trust the odds, stick to your strategy and go all-in?
If you are to reclaim your chips — eventually, at least — you’ll have to stick to your guns.
The same logic can apply to your business. When the going gets tough, successful entrepreneurs trust their processes. They don’t panic, and they certainly don’t fold. They know the numbers, and they have the nerve to up their wagers, even in the midst of a bad hand.
The art of doubling down
Back in 2014, our company, CellularOutfitter.com, was closing a remarkable 10-year period of consecutive year-over-year revenue growth. To scale further, though, we knew we needed to make some organizational upgrades.
So, we took a risk, discarding a strong hand in hopes of an even better one. We made a major investment in order to upgrade our technological infrastructure. As expected, our short-term financial performance took a hit. In the face of falling numbers, we found doubt creeping in.
Had we made the right choice? Or was our growth strategy a bust waiting to happen?
Instead of panicking, we recommitted to our strategy. A year later, when the cards were down, we saw that our persistence had paid off. Those infrastructure upgrades kicked off an unprecedented uptrend in growth, nearly doubling our company revenue in the following year.
Since then, I’ve learned to see those short-term struggles as the first rungs on a ladder to long-term success. All organizations go through painful transition periods. But if they stick to the plan, the stress ultimately makes them stronger.
Particularly in the following three business realms, entrepreneurs should learn to trust their own gut, double down and let the chips fall where they may:
Rapid growth often brings mounting expenditures and rapidly dwindling cash flow. That’s not necessarily a bad thing. As long as you’re making smart investments proportional to your return odds, today’s bets can pay tomorrow’s dividends.
As investment strategist Kate Warne advises, “Your strategy is designed to help you through tough times like these and keep you on track toward your long-term financial goals.”
The key phase here is “long term.” Financial wins are rarely apparent overnight. Track key performance indicators daily to know whether the cards will fall in your favor down the road. Put your emotions to the side by setting both return and business “stop-loss targets.”
As I learned firsthand, bringing new enterprise software on board can be expensive, from both a monetary and time perspective. It can also, however, raise the ceiling on future growth by increasing infrastructural scalability, revenue and profit margin if those things are incorporated correctly and utilized efficiently. Still, while CEOs may look at new tech and see dollar signs, developers and engineers see stress staring them in the face.
My company went from using an antiquated Microsoft technology stack to using a leading open-source ecommerce platform, which was a 180-degree change for our team. Our Microsoft-trained engineers had to learn a new programming language. But again, if we were to keep growing, we knew it was a change we had to make.
Beyond helping technical team members learn a new computer language, we also made sure to convey the big-picture benefits that would result from migrating to this new platform. Encouraging holistic understanding of a tech initiative boosts team members’ enthusiasm while broadening their skill sets, helping build their careers.
Harvard Business Review reported that about 70 percent of all change initiatives — including tech overhauls such as ours — fail. So, when my company upgraded its infrastructure, we knew that training would be an uphill battle.
We also knew, however, that 40 percent of employees who receive poor training leave their positions within a year, according to a study conducted by Dale Carnegie Training and MSW. That’s exactly what happened at Avon after a poorly planned SAP switchover. After spending $125 million over four years and losing droves of employees, Avon called off the software rollout for representatives outside Canada. To this day, the makeup seller’s Canadian representatives use SAP task management software, while its U.S.-based employees do not.
We didn’t want to make Avon’s mistake, so during the transition, we heavily invested in both hiring new personnel and training the existing team. In fact, because humans can be so resistant to change, it took more than two quarters of training before the team wholeheartedly embraced our tech evolution. Along the way, we could have given up and reverted to our old systems. Instead, we remained firmly committed to our plan, and we’re now reaping the rewards.
In the face of financial struggle, it’s only natural to question your strategy. But if you began your plan with confidence — after diligently researching costs, benefits and alternatives — don’t hesitate to stick to the script and go all-in.
Take calculated steps, knowing you’ll lose some along the way. Be resolute, stand behind your team and don’t blink. Go ahead and up that bet.