Business a matter of risks, rewards

Taking a risk.

Whether it’s launching a new business, offering a new product or forming a new partnership, risk-taking is at the heart of entrepreneurship.

It’s in the DNA of successful entrepreneurs. Risk breeds innovation, but when it doesn’t work out as planned, it can also lead to tragic mistakes.

We recently spoke to two veteran entrepreneurs, Shawn O’Donnell, of Shawn O’Donnell American Grill and Pub, and Phil Bannan, co-owner of Scuttlebutt Brewery, about risk-taking and their Everett small businesses.

Here are the highlights:

Question: What is an example of a risk that you took that turned out well?

O’Donnell: “The jury may still be out on the risk I took owning my own building. The economic timing of building when costs were at an all-time high in 2006 and now paying for it when we are in an economic slump creates a challenge, but I do feel that given time, owning the property must be a top priority, if at all possible, for a business owner. I leased my last restaurant for 17 years and when the lease was up and I couldn’t come to acceptable terms with the landlord, I grabbed my coat and left — tough deal.”

Q: What is an example of a risk that you took in your small business that didn’t turn out so well?

O’Donnell: “All of the risks I have taken that did not turn out so well, all happened before I was 35. I had many bad deals and bad leases. Starting out I was (and still am) a wide eyed optimist, which is a must for all small business owners. But being an optimist can be dangerous when partnered with inexperience.”

Q: What were your biggest lessons learned from both experiences?

O’Donnell: “These experiences have taught me to move slowly, gobble up all the advice I can from folks that have been successful in a similar field. I for one, did not do this when I was young, but I sure do now. Every chance I get, I will talk with other restaurant and business people and ask what is working for them and what is not. Don’t let a day go by without learning something new, and do not to assume that all that your competitors are doing is working, likely it is not.”

Q: What is an example of a risk that you took in your small business that turned out well?

Bannan: “Our original business plan was to be a microbrewery only. However, when we checked the regulations pertaining to the site we had selected, we learned that the city’s zoning code would not allow a brewery at our location. It was alright for a restaurant to have a brewery in its back room, so we decided to get into the restaurant business at the same time as entering the beer business. It’s risky enough to be starting one business, let alone two. While the restaurant consumed a whole lot of managerial energy and attention it turned out to be a good decision. The restaurant brought in a wide range of customers who in the course of their visit tried our beers and enjoyed them, thus introducing our products to customers who might otherwise not try them.”

Q: What is an example of a risk that didn’t turn out so well?

Bannan: “We knowingly took some risks hiring a couple employees who had some personal problems which we knew would make it very difficult for them to be successful. We were hoping we could provide some direction and leadership which would help them succeed. Unfortunately, we were sadly disappointed each time.”

Q: What were your biggest lessons learned from both experiences?

Bannan: “While a business plan is essential, the entrepreneur needs to be flexible and alert to opportunities that appear outside his original plan. In the words of the brilliant military strategist Carl von Clausewitz, ‘blindly following the plan will ultimately lead to failure because of random events and the independent will of the enemy’.”

Both owners emphasized the need for taking calculated risks with your business even in today’s slowing economy, but they also stressed the importance of the lessons learned and that sometimes the most valuable lessons come when the idea doesn’t work out as planned.

Pat Sisneros is vice president of college services at Everett Community College. Lynne Munoz is director of the School of Business Design. Send comments to entrepreneurship@

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