Why risk it?

Not taking the risk, could increase risk over time

Often not thinking about it, I am the one jumping off bridges or out of aeroplanes, racing cars in excess of 250km/h or skating down a steep hill whilst holding my 3-year-old daughter by her feet so she can do a handstand on the board with me as we speed down the hill, with parents all around the globe staring at the photos in horror. If there is a risk to take… ya, I am probably going to take it. 

Is this just stupidity, or is there a method to my madness? 

I once heard a fund manager present on low risk and high-risk funds for retirement. In a nutshell, he mentioned that often people opt for lower-risk retirement funds to protect their capital, however, over the long term it could mean that they have not generated enough money to retire. These low-risk funds are often outperformed by the higher risk funds over time presenting the true RISK [not being able to retire] becoming a reality at retirement.

This made me think, do we fully comprehend and consider all the scenarios that could play out from making a risky move? Do we ever, in our calculations and risk assessments, stop to deeply think about the risk, of not taking that risk?

5292 days ago, I left a great job with an unrealistic, ill-prepared business plan to start my own company. My positive mindset pushed me to resign from my employer without any funding and nothing more than a dream. I made some big mistakes and the early years were filled with lawsuits and continuous struggle, but eventually, it became a significant reward in my life. I had started Kilowatt Audio Visual (PTY) Ltd.

Fast forward 6 years, Kilowatt is ticking along at a great beat, making a name for ourselves in the event services industry and already in our second warehouse, we start to realise we are running out of space. We reach out to Daniel Etherington who starts showing us property options. We did have a basic brief, which must be near town, have parking and near the N2, M5 and N1 freeways. Danny takes us to the first property in a lovely small business park. From the outside, I see nice offices and two roller shutter doors. It does not look that big, I think. The door opens and I stare into a warehouse that is over 1000sqm. At the time our warehouse was around 300sqm with low ceilings, so this huge warehouse with its 10m high roof was massive. I loved it! It was five x our current rent at the time. How was I going to sell this to the leadership team? I knew our business needed this space, but it was too much for now, space and cost. I started looking at the option to share the space but no deals emerged for this. Eventually, I pushed everyone out of their comfort zones. We signed a 5-year lease. It was scarier than starting the company, but within 6 months our business had grown into the space and although the expense was huge, we were seeing much better productivity in our amazing new home. 

Some might think this is where the risk/reward equation ends, but this was not the end of my learning. Cue Covid-19. The events industry is among the worst-hit sectors impacted by the pandemic. Our business holds on for dear life, fighting every day, doing everything we can to keep the heartbeat going after losing 95% of our revenue. More traumatic than losing the revenue was losing 75% of our workforce, our family. It was devastating and still is. We shut down three of our four locations around the country, tried diversifying our offering and ultimately ended up turning our Cape Town factory, into the Kilowatt Connect Studios. 

We had less than zero budget to execute this strategy, but under the guidance of Kate Shepherd, creative genius, we upcycled old set pieces and random old things from our warehouse, to transform our factory into the most amazing spaces for virtual and hybrid events. This was the move that would save us from hitting the floor. 

So how is this relevant to my post? Let me tell you. 

The seemingly massive risk I took 8 years earlier by signing that lease with Danny had ultimately provided a suitable space for us to create these studios. Centrally located in a safe business park with loads of space and the best coffee in the world, attracted clients new and old. We observed competitors trying to do the same, but they had awkward spaces in less than desirable areas, which made it challenging to match our product. 

At the time, it would have been easy not to take the massive risk of the new warehouse, sighting profitability and many other factors as excuses. But we decided to forge ahead and persist with the huge new expense. This would ultimately save our company. If we did not have this space, my post today could have been very different. Kilowatt would have folded.

Are there any risks that you should reconsider with the mindset of analysing the risk, of not taking the risk?

P.S. If you are curious to see what the Kilowatt Connect Studios look like, please drop me a line.

– Dillon Jearey
Cell: 082 745 8800
Email: [email protected]

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