It is all too easy for small business owners to constantly worry and stress over what may go wrong in their business. However, problems occur on a daily basis, which is why you need to implement a strategy for how to deal with them. Business leaders could learn a thing or two from day traders in this regard, as when a move fails to go the right way for either a business or a trader, the solutions possess numerous parallels.
The ability to exercise damage control for a day trader or small business owner is essential to both short-term and long-term success. Here are a few suggestions that can be applied to either a business seeking to minimise damage or a day trader who needs to bail on a trade before the damage spirals out of control.
Remain calm throughout
This may seem somewhat obvious, but it is a step that can be all too often forgotten, and the chances of making any kind of sensible decision when stress has taken over can be thrown out of the window.
Keep your emotions in check
Emotions fall out of control when disaster strikes, so a business owner or a trader needs to assume control of them as quickly as possible. While remaining in control of emotions every second of the day is asking too much, you need to be able to do so as often as you can in order to make progress and meet your goals. When a setback occurs, it’s time to step back, cool off, and reassess the situation.
Use the technology at your disposal
The ability to access help from others cannot be underestimated. There is a wealth of information online, both for business owners and traders. Enlisting advice online, whether to form a mastermind group, gain new business, or simply use as a tool to refocus and get inspired, is one of the smartest moves that you can make. In business, it may be helpful to gain advice from key figures in your field. For example, twitter can be used as a powerful tool to stay updated on what economists are thinking about specific events.
Use the internet to plan with common sense, and technology to complete tasks that would be difficult to achieve, otherwise. There is no excuse to omitting this step: you can easily achieve this with just a smartphone and internet connection.
Take time out to contemplate your next move
While your mind would understandably be focused on the present situation, you need to be constantly learning from the decisions you make, both good and bad. Making a mistake can be a bitter pill to swallow, for both business owners and traders. However, being honest with yourself as to how the mistake was made, so that it may be prevented in the future, is critical.
Prioritise cash flow
It can be all too tempting to retreat in the midst of a setback. Lying back with a glass of something strong, avoiding all responsibilities, is the easy way out. The problem is that that could easily lead to more erroneous decisions that could take you to a place where there is no way back. You have to do what it takes to maintain cash flow. If you allow the effects of a bad decision to continue, it could wipe you out.
Never stop practising
Practising the art of damage control when there is no damage to control may seem counterintuitive. Second guessing a future disaster is next to impossible, but it is certainly feasible to practise how to get into crisis mode.
Another point which may seem obvious, but is an important one all the same, and one that shouldn’t be omitted from any strategy involving damage control. It is all too easy to blame someone – or something – else, and thus fail to learn from your mistakes. Both business owners and traders need to acknowledge the role they have played when a disaster has occurred as a result of their own decision-making.
Manage your risk to prevent future setback
Many risk management strategies employed by larger financial institutions, including portfolio management theory and options pricing, were developed from complex mathematical formulas. These can be applied to tasks such as setting government bond prices and managing pension fund investments. It doesn’t take a mathematician, however, to mange the risk and reward of commonplace business activities as developing new products, entering new markets, or entering a joint venture. For day traders, there are a number of risk management tactics at your disposal, such as stop losses. The best way to exercise damage control is to minimise risk in the first place. Even the great Elon Musk isn’t too proud to apply risk management strategies to his countless projects.
This doesn’t mean that risks shouldn’t be taken. It’s just about how to react to them should the outcome fail to fall in your favour. Business owners and traders who risk it all for the sake of potential fast gains may find that they lose everything. By all means, take risks – but even more importantly, know when to stop should things take a turn for the worse. The smart thing to do is play between two extremes: not taking too many risks, but not be standing still, either.
A setback doesn’t necessarily mean the end of your business or trading goals. Life holds many unexpected twists and turns and you can either come out stronger and wiser or defeated and broken. If you are wiling to learn from setbacks, you can become a wiser business owner and more profitable trader. Resolve each setback one at a time and be willing to grow. The reward for your patience cannot be underestimated.