Transforming businesses from obstacles to prosperity!

Thank you for taking the time to investigate what we have to offer. We created this service to assist you in making your company the very best. We differentiate ourselves from what others define as a consultant. The main difference between consulting versus counseling is preeminent in our mind.

A consultant is one that is employed or involved in giving professional advice to the public or to those practicing a profession. It is customary to offer a specific offering without regard to other parameters that may affect the ultimate outcome.

A counselor is one that is employed or involved in giving professional guidance in resolving conflicts and problems with the ultimate goal of affecting the net outcome of the whole business.

We believe this distinction is critical when you need assistance to improve the performance of your business. We have over thirty years of managing, operating, owning, and counseling experience. It is our desire to transform businesses from obstacles to prosperity.

I would request that you contact me and see what BMCS can do for you, just e-mail me at (cut and paste e-mail or web-site) stevehomola@gmail.com or visit my web-site http://businessmanagementcouselingservices.yolasite.com

Mission Statement

Mission, Vision, Founding Principle

Mission: To transform businesses from obstacles to prosperity

Vision: To be an instrument of success

Founding Principle: "Money will not make you happy, and happy will not make you money "
Groucho Marx

Core Values

STEWARDSHIP: We value the investments of all who contribute and ensure good use of their resources to achieve meaningful results.

HEALTHY RELATIONSHIPS: Healthy relationships with friends, colleagues, family and God create safe, secure and thriving communities.

ENTREPRENEURSHIP: Learning is enhanced when we are open to opportunities that stretch our thinking and seek innovation.

RESPECT: We value and appreciate the contributions of all people and treat others with integrity.

OUTCOMES: We are accountable for excellence in our performance and measure our progress.

Monday, February 7, 2011

RISK/REWARD System in Business

Risk and reward are related factors in the business world. Any company that chooses to enter the marketplace faces risks, whether financial or operational. Therefore, reward is the benefit achieved when companies mitigate their risk and earns income from their operations.
Systemic Risk
Systemic risk is the collapse of an entire market or industry in the marketplace when one company fails. Businesses face this risk when selling products in a saturated marketplace with large competitors.
Systematic risk is faced by businesses that do not diversify their products or services. Companies can avoid this risk by offering several products in the marketplace and creating multiple revenue streams.

Measuring Risk
Businesses measure risk by comparing their expected rate of return to the normal risk-free rate of return in the marketplace. Formulas like the Capital Asset Pricing Model (CAPM) help businesses determine the amount of reasonable risk by comparing rates of return to the amount of risk in investments.
Mitigating Risk
The first step in earning rewards in business is to mitigate the risk involved in business decisions. Diversifying investment strategies can mitigate risk. Choosing some safe investments or products along with some high risk/reward investments or products will maintain a diversified business strategy.

Achieving Rewards

Businesses achieve rewards when they choose investments that have the highest rewards and the lowest amount of risk. Some investments will have higher risks than others, so businesses will require higher returns on these investments. All business decisions carry risk, so carefully measuring the risk versus the reward is essential when reviewing business opportunities.

We face business decisions every moment of the day. Some business decisions are more important than others.

.                 Your business is at a fork in the road. Which way do you go?
.                 Should I invest more money into the company?
.                 How much of my money should I invest?
.                 Maybe I should sell my business?
.                 Is my business worth saving?
.                 Should I downsize or try to grow?

Unless you are clairvoyant, there’s no way to know for sure whether your business decisions will be the right ones. In the end, we should all have to do the best with the information we have at the time. The business decisions you make based on limited information may not be the business decisions I would make, but the results and consequences from those business decisions will certainly be yours and yours alone. 
Awhile back, I remember a colleague of mine making a statement about my opting to stay the course and continue to conduct business as usual when everyone knew that the environment in which we were now operating was very different and more importantly, unfamiliar.  His statement to me was,” Are you basing your business decisions on facts or feelings?”  When push came to shove, I was basing my business decisions more on feelings rather than facts. 

Since that time, I have found one decision-making tool that I’ve learned to use over the years that helps me organize my thoughts and separate facts from feelings.  I’ve adopted it and applied it to many business scenarios. It’s the risk-reward calculation. In other areas of business, it’s also called a cost-benefit analysis. In layman’s terms, it spells out the probabilities of success and failures based on certain actions.
Here are 5 basic questions you can ask yourself before you make business decisions. The first order of business is to simply stop and take the time to go through this exercise.
5 Essential Questions to Ask Before Making Important Business Decisions

1.     What Are the Potential Rewards? What could you gain by performing action X? It could be a dollar amount, or something less tangible like peace of mind or the respect of your co-workers. In some cases it could be both.
2.     What Value Do You Place on the Potential Rewards?  This question, in some respects, is more important than the first. If you don’t personally value the rewards presented by action X, what’s the point? Even if you are not a numbers person, you should place a numerical weight on each reward factor and come up with a mathematical model for whether or not you should move forward with a particular decision.  In the case of rewards/gains, it becomes essential and critical to calculate the potential dollar amounts from your business decisions.
3.     What Are the Potential Risks?  What risks are inherent in action X?  What could go wrong? What is the likelihood that the risks you’ve outlined could materialize? What is the dollar amount related to each decision risk?
4.     What Value Do You Place on the Potential Risks?  Every risk has to have a potential dollar gain and loss associated with it. If you could potentially lose $50,000 on an investment, you might be fine with that. But if that $50,000 represents all of your capital, you might see things differently. If you’ve just lost you’re your largest client, you might not want to risk any of your capital. Considering best practices and historical proof prior to your discovery for change should be leveraged and weighed in your decision making process as well.
5.     What If you’re Wrong?  Unconsidered variables and unknowns can throw a wrench into your risk-reward calculations. What if the rewards you anticipate don’t materialize?

What if there are risks out there for which you have not accounted? By definition, you cannot enter the proverbial Black Swan into your calculations. For those who aren’t familiar with the term, the reference is to Nassim Taleb’s bestselling book about the highly improbable. (Tangential Mini-Rant: Many have said that the recent (ongoing?) financial crisis was a black swan event.)
The key here is to outline some contingency plans. How will you react if your business decisions don’t pan out? Will you sell or hang on in hopes of a recovery? How will you react if that recovery never happens? How will you react if you are correct and your business decisions yield 20% more than expected? Would you continue to implement calculated risk-reward decision making for the remainder of the business life cycle?  The key is to have a plan in place before these things happen.
These guidelines won’t guarantee a 100% winning decision. Nothing can do that. But at least you’ll know that you’ve based your business decisions on facts not feelings and numbers not notions to increase your chances for success.
In my 15 years of working closely with business owners, I have found those who have sought information from outside of their own reaped the benefits of risk-reward calculations to steer their business towards their goals.
How are you going outside of your own knowledge and experience to calculate your risk-rewards for business decisions?

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