Sometimes it pays to take risks in business

If you have ambitions to expand your salon business, risk is an unavoidable element, says Affinage managing director, Eric Bailey. Whether you love the buzz of a gamble or the very thought brings you out in a cold sweat, your chances of success lie with how you approach that risk.

As managing director of a global professional hair- care manufacturer, I am no stranger to risk. Having successfully grown the company from scratch over the past 16 years, its products are now sold in more than 50 countries worldwide. 

When our company got to a point where we had to take a massive financial undertaking in order to move forward, it was a major financial risk to me, but it was a case of either roll over or bite the bullet.

These are the considerations that I believe any business should make when weighing up risk.

Do your homework and assemble all the facts. Every business decision you make has pluses and minuses, so it is important to look at these and consider what has most weight. It is crucial to look at the downsides and always bear in mind the potential repercussions.

Some people rely on their gut instinct when making decisions, but don't rely on it alone. Talk it through with others because inevitably they will highlight items you may have missed. Listen and consider other views, but filter it down to the relevant information and don't be swayed by overt negativity. Just consider the views in a methodical way and make the decision your own.

A calculated risk means that you have a greater certainty of it coming off than it failing. However, there is always a chance that it may go wrong and you must have a contingency plan.

Your plan B is about your salon's ability to withstand the consequences. A contingency plan, whether it would be reverting to your original business, taking the necessary steps to reduce your outgoings while you get back on track or trying an alternative approach, is a crucial part of your decision. It not only prepares you mentally, should the worst happen, but it will give your investors' confidence in your business acumen.

Don't beat yourself up about making mistakes. One of the most important lessons in business and in life is to learn from your mistakes and not make them twice. Mistakes are a vital ingredient in helping you learn how to minimise risk and can give you valuable insight from your unique experiences that will help you in future when you have to make a judgement.

Hairdressing is such a personal service and it is only as good as the people in the business. If, for instance, you are looking to open a second salon, it is vital to make sure that you can retain the profitability of the core business.

Good team members are the key to expansion and it is very important to find people you can trust and reward them appropriately. 

Think of ways to secure them for the longer term, such as a profit share scheme or partnership. The key is to give them a personal stake in the success of the business to keep them secured, motivated and loyal to your business.