Pragmatism and ruthlessness are qualities that each and every businessman should possess irrespective of whether it is big or small. Small businesses have less capacity to absorb losses. The profit that you earn every month is distributed towards your family expenses and business expenses.
In such a scenario, saving money can become very difficult. The savings that you have in your hand cannot be used to absorb business losses except in the most difficult circumstances. Hence, it is better to prevent losses than using your savings to recover them at a later date. This conservative approach is often the biggest hallmark of a small business. According to some, this is the biggest reason why people don’t grow.
You have to take risks to grow and risks can backfire as well. Well, you cannot afford to adopt a conservative approach and hope to stay in business for long. All it takes is a single recession in a single economy halfway across the world for your economy to start shaking.
The American economy is one of the biggest economies in the world but it is not insulated from global shocks. In such a scenario, it makes sense to keep innovating and experimenting at all times. At the same time, it is equally important to know when to cut your losses and run. Many persons start new products, ventures and services and behave as if it is no different than family jewels.
Well, adopting too emotional approach and focusing on continuing with a loss making product or service is only going to backfire in the long run. When you have two or three product lines and earning profit from just one, it makes sense to skip all others and focus on the profit making venture. To experiment is not bad. However, to be pigheaded about your experimentation and to ignore the ground realities does not make sense either.