Reviews of Low Risk High Reward:
The second chapter of Low Risk High Reward alone is worth the price of the book. In it, author and entrepreneur Bob Reiss, who founded a three-time Inc. 500 company called R&R, writes about what he refers to as "numeracy," the numbers equivalent of literacy. Reiss lays out the key numbers that all CEOs should know if they want to have a grasp of their companies' health. He prescribes taking a regular financial snapshot of your company by updating cash-flow statements, doing a cost analysis of your products, and creating break-even analyses both for the company and for each new product. Understanding such numbers, he writes, can minimize the risk that any financial surprise, like a cash shortage, will creep up on you.
The genius of Reiss's book lies in how he makes it abundantly clear that the success of his companies -- including R&R, which produced a successful TV Guide-based trivia game -- has not resulted from any dramatically new, earth-shattering ideas. "Tinkering at the margins is what most businesses are really about," he writes. You take someone else's idea, work it a bit, and make it just a little bit better. By selling a proven idea to a market that you know wants that product, you're effectively minimizing risk.
What makes Reiss's advice stand out is that it's clear he's speaking from his own experience in the trenches. Instead of droning on about the need to write a mission statement, for instance, he suggests that if you don't intend to follow your mission statement, then you shouldn't bother to write one; having no mission statement at all is better than having your employees see you as a hypocrite. He's also refreshingly honest about the fact that he finds the idea of a formal business plan to be "highly overrated." He claims he's never had a written business plan and believes that the only time you really need one is if you're planning to raise money.
Practical Advice On Launching Your Business
Bob Reiss has spent the past several decades making entrepreneurship his business, and has become successful by learning how to fine-tune the gears that set it in motion. As the creator of the popular TV Guide Trivia Game and the founder of the Valdawn Watch Company, his efforts are so inspirational that Harvard Business School Professor Howard Stevenson made a case study of Reiss’ entrepreneurial exploits to use in his classes.
In Low Risk, High Reward: Practical Prescriptions for Starting and Growing Your Business, Reiss and co-author Jeffrey L. Cruikshank define entrepreneurship as “the recognition and pursuit of opportunity without regard to the resources you currently control, with confidence that you can succeed, with the flexibility to change course as necessary, and with the will to rebound from setbacks.” This flexibility is the primary ingredient that his book breaks down into useful advice for anyone seeking to learn more about how to work smarter and grow a start-up business.
Reiss begins his book by examining the skills needed by an individual entrepreneur to succeed.
By being creative, flexible, a good salesperson, passionate, able to trust, and in possession of a deep-seated thirst for information, an entrepreneur has the tools needed to build a new business from the ground up. Another primary ingredient in this recipe is personal integrity that can withstand the temptations that will come along on the road to success: Core values are an integral part of a successful venture, and sacrificing them can lead to failure.
The Importance of Numeracy
Next, Low Risk, High Reward looks into the understanding and use of numbers to reveal the facts behind a new venture. He calls this “numeracy,” which he refers to as “the numbers equivalent of literacy,” and encourages every entrepreneur to get a grasp of its importance.
Using numeracy as a foundation, he moves on to ways to see, manage and reduce risk to acceptable levels by starting in small markets before moving on to larger ones. Other ways for start-ups to determine risk include converting fixed costs to variable costs, talking with other entrepreneurs about their experiences, getting outside advice, and working with an “incubator” that can help to support a small business until it gets on its feet.
The Distribution Chain
To help the roots of a young business flourish, Reiss offers many ways to make it healthy and vital through attention to products.
Of course, no business can succeed without getting orders, so he takes his readers through the process of “selling in” to other businesses that will become part of the distribution chain, and the benefits of selling directly to consumers. He offers bountiful advice about working with retailers, using manufacturers’ reps, licensing products, using advertising, and making marketing work.
And, if you thought the initial order was crucial, don’t forget the reorder. The success of this “selling through” will rely on a sturdy infrastructure that is built on firm relationships and a knack for dealing with problems and opportunities.
After the Success
After a business is growing nicely from all this nurturing, Reiss offers up the pros and cons of different options for dealing with a company that has been around long enough to serve its purpose. Deciding whether to keep a company as it is, shrinking it, growing it, going public, selling it, or closing it down should take considerable thought. His guidance helps to clarify these decisions.
Why We Like This Book
Reiss' advice is valuable because it comes not only from his own ample experiences in the world of business, but also from the knowledge he has acquired from dozens of students, salespeople and other experienced entrepreneurs.
Along with step-by-step instructions that open up a wealth of understanding about the issues with which all entrepreneurs must contend, Reiss also provides a copy of the Harvard Business School case study that is based on his experiences, which provides more compelling and instructive reading.
Low Risk High Reward not only reflects the intelligent spirit of a man for whom entrepreneurship has provided success: It also demonstrates his ability to put his ideas into practice. By publishing this book, he uses the very skills he delivers and takes the entrepreneurial spirit to the next level.
Ever wonder if you had what it takes to run your own business? Reiss (president, R&R Recreational Products, Inc.) sums up his entrepreneurial experience in this new work, which nicely updates and extends the Dale Carnegie product line. Reiss explains the many ways he has learned over the years to avoid risks, covering every obstacle aspiring entrepreneurs are likely to face as they strive to grow their idea into a profitable company. Basing the book on his own career with 14 successful start-up companies, Reiss covers such topics as getting ideas, finding money, hiring the most qualified people, getting orders and reorders, and whether or not to go public, to expand, or to sell a company. The case study analyzing R&R's successful introduction of the TV Guide Trivia Game in the early 1980s is alone worth the price of this solid work, which integrates sound business practices with the dynamic nature of starting a business. After many years of sharing his down-to-earth advice with Harvard Business School MBA classes, Reiss now offers readers his wise insights into just what it takes to be in business on your own. Highly recommended for academic libraries supporting business curricula and larger public libraries.--Dale Farris, Groves, TX Copyright 2000 Cahners Business Information.
Reiss, an entrepreneur, does a competent job of covering all the ways to minimize the risk of starting a business--for example, through entering a franchise, partnering with an established company or finding financial backers. In particular, his discussion of the importance of numeracy (the financial equivalent of literacy) helps distinguish his effort from many similar books. Copyright 2000 Cahners Business Information.
Entrepreneurship is synonymous with
risk taking in most minds, but Reiss gives lie to the assumption
that entrepreneurs seek out and enjoy taking risks. Reiss has
built a long and successful career by minimizing and avoiding
risk, and his methods are used in case studies by Harvard
business students. Reiss has started and sold or phased out 16
different business ventures, exiting whenever sales of his
products have begun to slow. Here he spells out his philosophy
of doing business. He identifies the skills and attributes
necessary to succeed, emphasizing the ability to understand and
use numbers. Reiss then zeroes in on spotting, managing, and
reducing risk. He suggests how to get ideas for what business to
consider and explains how to get started and raise money. Reiss'
companies have been based mostly on fad products, and he devotes
considerable passion to the importance of selling. He concludes
with a discussion of the personal aspects of being successful.
(Included in the appendixes is a sample cash flow statement,
which is sometimes difficult to locate at library reference
desks.) David Rouse
Contrary to popular belief, successful entrepreneurs do not crave risk. In fact, they strive to minimize it. Bob Reiss, founder of several companies and the subject of a Harvard Business School case study, has written Low Risk, High Reward to share the many ideas he's developed over the past four decades for succeeding through prudent action. . .In straightforward language, he addresses practical methods for spotting, managing and reducing risks in virtually every facet of business . . .Current business owners, along with those who hope to join them, will find his advice helpful.
While required reading for cautious entrepreneurs in the early stages of planning or developing a business, Low Risk, High Reward also provides existing business owners with insight on protecting what they've achieved and on safely expanding their businesses. Reiss details his own prescription for managing risk and relates success stories of other entrepreneurs while covering a broad spectrum of likely perils business owners will find in such areas as funding, product development, introducing products and deciding whether to have an IPO.
Reiss goes on to discuss skills entrepreneurs need, including salesmanship and communication ability. He includes decision-making as a key skill, pointing out that entrepreneurs who act quickly have the edge. He favors making business decisions intuitively, providing you have experience and knowledge which gives you valid intuition.
He points out that risks aren't the same for everybody and uses the example of a gymnast on a balance beam. He writes, "I'd sure rather see a young Olympic gymnast on a balance beam than me. The difference, of course, is preparation and ability. Risk is variable, depending on who's taking it." The lesson is that experience and personal contacts lessen risk.
One of my favorite chapters is "Numeracy" which briefly discusses "thinking in numbers." Reiss briefly mentions product cost analysis, break-even analysis, and cash-flow analysis. He does an especially thorough job discussing cash flow, which includes a nice cash-flow example in an appendix. Reading this is well worth any new entrepreneur's time. Yet, many new business people won't read it until after they have some bill due, and find out, despite doing well, they don't have the cash to pay the bill! Then, cash flow will become important to them. So, put a bookmark in that appendix, and remember it's there!
Low Risk, High Reward includes an appendix giving very complete details of one of Reiss's company's experiences with TV Guide Trivia Game, which is used as a case study at many business schools. It's well worth reading.
Low Risk, High Reward has excellent advice about managing risk, such as controlling inventory, turning fixed costs into variable costs, partnering intelligently with others, piggybacking on a big name, etc. But, I think a few key points are missing. For example, is the product your company creates really useful? In particular, I think many of the lowest-risk, highest-reward companies are companies selling business-to-business products, in particular, products which can be objectively shown to have great value to the purchasing company, either saving them or making them money. This type of analysis is lacking in Low Risk, High Reward.
Reiss writes about what he knows and gives you his best business advice. It's well worth reading, regardless of what kind of business you start. Reiss's advice is applicable to any kind of business. It should help you reduce the relative risk of doing whatever it is you are trying to do. However, it won't steer you away from inherently dangerous, high-failure prone types of businesses. I personally feel steering clear of such businesses is one of the best ways to reduce your risk. So, I'd also give some consideration to what type of company you contemplate starting, the likely profit margins, revenue per sale, created value of the product, and industry competitive factors.
People want to business with people they trust. That's why building trust should start the day you open your business, advises the author of a new book of entrepreneurship. What are some ways to build trust? Here are tips from Bob Reiss, author of Low Risk, High Reward: Starting and Growing a Business with Minimal Risk:
Reiss explores entrepreneurial issues across the life span of a company, from finding good ideas, to raising money, to building products, to getting orders and reorders. He also focuses on on the skills and attributes of the successful entrepreneur, including a separate chapter on what he calls "numeracy": the ability to understand and use numbers to help one's business. Included in this book is a useful appendix that instructs the reader in how to create and read a twelve-month operating cash flow statement.
Many HBS readers will recognize "The R & R Case," by HBS professor Howard Stevenson. Introduced in the 80's, the case focuses on one of Reiss's business ventures, and for many years it was the first case taught in entrepreneurship electives at the School. Reiss provides his own commentary on the case, which distills a number of the important themes in the book.
In the book's introduction, Reiss writes that Low Risk, High Reward is intended for a wide spectrum of readers -- from those who already own their own businesses; to nine-to-fivers poised to take the entrepreneurial plunge; to graduate school, college, and even high-school students for whom entrepreneurship is still a distant dream. In Low Risk, High Reward, Reiss offers them all a key piece of advice gleaned from his many years on the entrepreneurial front lines: "Working smart can be even more important than working hard."
Many small businesses fail within the first few years of their existence. Bob Reiss' objective in Low Risk High Reward: Starting and Growing Your Business with Minimal Risk is to improve the success rate of small businesses by passing on "real world" wisdom gained through many years of operating successful small businesses. Writing in an approachable, conversational style, the author discusses some of the key elements involved in starting and running a small business that can weigh heavily on the ultimate success or failure of the firm. The perspectives, insights and guidance provided in the book will be helpful to anyone currently operating a small business, but will prove especially helpful to individuals who are evaluating small business ownership as a potential career choice.
Although targeted primarily at entrepreneurs, High Risk, Low Reward will also prove useful for members of the academic and consulting communities. The concepts emphasized by Reiss, and his frequent anecdotes illustrating the concepts in action, help to connect theory with reality by providing valuable insights into how successful entrepreneurs modify, adapt and implement various small business management theories. These insights should prove helpful to consultants working with struggling clients, if only as a means for providing evidence that sound adaptation and implementation of key business practices can contribute to success. Similarly, teachers of small business management or entrepreneurship courses may find that their students benefit from the perspectives of a successful entrepreneur as they seek examples of classroom learning applied to actual business practices.
The first four chapters provide important attitudinal considerations for those thinking about, or currently running, a small business. Chapter 1 provides a description of ten personal attributes the author believes are important for individuals considering entrepreneurship, followed by a discussion of four key skill sets that the entrepreneur needs to possess or to develop. Chapter 2 introduces the importance of "numeracy," defined as the numerical equivalent of literacy and requiring a deep understanding of the ratios and financial statements used to monitor the health of a business. Chapter 3 begins a discussion of risk and methods to manage risk by finding ways to reduce it to a level that is comfortable for the business owner. Finally, Chapter 4 provides a brief discussion of the types of product ideas a small businessperson can reasonably expect to pursue, where to find these ideas, and how to test ideas to minimize the risk of failure. Reflecting the practical nature of the book, the author emphasizes that most successful small businesses are built on an ordinary, mundane idea and not a flash of brilliance.
The following five chapters are devoted to the challenges of establishing a small business and the activities required to ensure the long term success of the enterprise. Chapter 5 discusses the basics of starting a company, including how to get into business (start a new venture, buy an existing company, buy a franchise, etc.), legal forms of organization, sources of funding, staffing, location, and the like. Chapter 6 covers topics relating to building the company, including advice on planning for the future, managing attorneys and other professionals associated with the firm, and gaining credibility. Chapters 7 through 9 conclude the heart of the book by considering key aspects of designing and producing total products, guidance on how best to sell products, and, most importantly, how to obtain reorders to ensure the long-term viability of the firm.
The book concludes with a chapter entitled "Reassessment: What's Next?" and four Appendices. "What's Next?" explores the importance of evaluating what the future may hold for the entrepreneur and the business, such as maintaining the company on the same course of growth, shrinking or growing the company, going public, selling, or closing the firm. Two of the more useful Appendices include an example of applied "numeracy" and a Harvard Business School Case (386-019) developed around the author's experiences that provides applied, "real-life" examples of the themes presented in the book.
The dominant theme throughout the book and uniting the various topics is stated plainly in the subtitle: Starting and Growing your Business with Minimal Risk. As any business owner knows, risk is an everyday reality, and the consequences of risk gone bad can be catastrophic. Perhaps for this reason, successful entrepreneurs tend not to be high-rolling risk takers, but skillful managers of risk in all aspects of their business operations. Throughout the book, the author provides insightful guidance and advice on how to evaluate, manage and reduce risk in various forms, and illustrates how to apply these ideas in a business setting by using personal anecdotes and the experiences of other successful entrepreneurs. While some readers may find much of the advice on risk-reduction to be familiar territory, even experienced entrepreneurs are likely to discover one or two valuable ideas that they had not previously considered. Individuals launching a small business and those contemplating an entrepreneurial endeavor, in contrast, will likely find the risk-reducing strategies to be extremely beneficial.
While the themes of risk reduction and risk management touch most aspects of starting and running a business venture, many readers will find the author's insights in three areas to be particularly useful. The first of these involves the personal attributes and skills that tend to be found in successful entrepreneurs. Many entrepreneurs are predisposed to failure because they unknowingly lack the internal resources required for success, and fail to consider the importance of these internal characteristics. Serious consideration of the attributes and skills highlighted by the author will help prospective entrepreneurs minimize their risk of failure by inducing the self-evaluation necessary to determine personal readiness for launching a business. Importantly, the author emphasizes that the lack of any particular attribute or skill does not mean that an individual cannot become a successful entrepreneur. Rather, a critical assessment of personal attributes and skills can help to minimize the risk of failure by provoking consideration of how weaknesses may be overcome. Perhaps other personal attributes can help compensate for those that are weak or lacking. Or, perhaps, skills that are lacking might be acquired or honed through training or education to enhance the likelihood of success.
The critical skills listed by the author contain few surprises, and include creativity, the ability to communicate effectively, the ability to sell (yourself, your company, your products), and the ability to make decisions. The personal attributes the author uses to describe successful entrepreneurs include familiar characteristics such as passion, curiosity, energy, work ethic and mental toughness, but also include balance, egotism, and greed, which may be overlooked by many current and prospective entrepreneurs. Balance can be important in helping an entrepreneur keep the venture in its proper perspective, thereby helping to prevent burn-out. Egotism is an attribute that is often considered to be a liability for the entrepreneur, and can be just that if taken to an extreme. However, when defined by the author as a belief that not only can you succeed, but that you deserve to succeed, a measured amount of egotism can help the entrepreneur overcome what might be a paralyzing fear of failure. Similarly, greed is a harmful attribute for a business owner when taken to an extreme. When defined as a state of "wanting more money than you currently have," however, a controlled level of greed can be a powerful source of motivation.
The second area in which the author's risk reduction techniques will be helpful to small business owners is cash flow. Many entrepreneurs focus their attention on market share or sales revenue, but cash flow is the life-blood of a small business. The author avoids a dry, textbook approach to financial statements and accounting practices by providing a number of practical suggestions for managing this key aspect of a business. These ideas can be found not only in the chapter on "numeracy," which presents a more formal discussion of measuring a company's financial performance, but throughout the book. Many of these ideas relate to the notion of finding creative ways to convert fixed costs into variable costs to better match or control cash outflows with cash inflows. The use of manufacturer's representatives rather than an in-house sales force, using a public relations firm to gain valuable "free advertising," using factors, and building relationships with suppliers to receive good payment terms (and as potential sources of capital) are just a few examples of techniques suggested by the author to maintain a healthy cash flow.
A final area of risk-reducing advice involves what many entrepreneurs may consider to be the most threatening aspect of running a business: selling. The author draws heavily from his extensive selling experience to present useful insights and techniques that help de-mystify sales and improve the business-owner's chance of selling successfully. While too extensive to adequately capture in a brief review, the author's advice includes suggestions to help maximize effectiveness by focusing on particular segments or channels of distribution, building and maintaining relationships with buyers, managing manufacturing representatives to maximize performance, focusing on obtaining reorders as well as initial orders, and actively managing inventories to prevent stock-outs or large close-outs. An important distinction made by the author that should be helpful to many business owners is the notion of "selling in" vs. "selling through." Selling-in is defined as the process of selling to middlemen or buyers during the launch stage of a product, which is critical to the initial success of a product. Selling-through, however, may be more critical to the long-term viability of the company and involves a focus on creating consumer demand that will pull the product through the distribution channel and drive reorders. Unfortunately, many small business owners lose sight of the importance of selling-through in their excitement to "get the product out there."
Overall, Low Risk, High Reward: Starting and Growing Your Business with Minimal Risk is a well written and informative book containing practical, experience-based advice for anyone thinking about starting a small business, as well as for current small business owners wondering "where to from here?" While the book does not attempt to provide a detailed road map of every activity required to launch a business, it will help the entrepreneur consider, evaluate and find ways to reduce the risks inherent at each stage of the process. Perhaps the one weakness of the book is its almost exclusive focus on product-based companies, although much of the advice it contains can be applied to the growing number of small service providers. Overall, entrepreneurs who adopt at least some of Bob Reiss' ideas and suggestions are likely to find that they can minimize the risks in their venture, and increase their probability of enjoying long term success.
Risk, High Reward
List Price: $19.95