Quote of the Week: My First Rule of Business

“My first rule of buisness … you have to protect against the downside.“

This comes from a very famous businessman.  You’d be hard pressed to find someone who hasn’t heard of him.  And, you also may be hard pressed to find someone who doesn’t like him; admire him.

For those who say they don’t like him or admire him, I’d have a few simple questions as follows:

If I got a “No” answer to both, then I’d have to take their “I don’t like him; I don’t admire him” opinion with a grain of salt.

Have I ever met him?  No.  Would I like to?  Absolutely!

Why do I like him?  Why do I admire him?

Well, first of all, after reading his book, “Business Stripped Bare“, I’ve concluded that he’s an honest, fair and well meaning person.  Does he make mistakes?  Sure.  Does he have flaws?  I think so.  And, to this I say, “So what?  Who doesn’t?”

But, this honest, fair, well meaning person is also a master at the art of business.  And, he’s got the results to prove it.

If they gave out grades for business success, he’d be off the scale.  They’d have to create a new grade structure to properly show the level he’s achieved.

So, what does he mean by “protect against the downside.”  And, why is it so important?

Well, I’ll tell you in his own words; here’s the entire quote …

“What I said then – and it’s repeated again and again in this book – is my first rule of business, and if you take nothing else from this book, take this:  you have to protect the downside.”

So, you don’t have to read the book now.  You know the theme, the lesson, the purpose … protect the downside; always.

It seems like such an easy lesson.  Seems like common sense.  Yet, just like common sense – protecting the downside – is not as common as you would think.  Otherwise, why would he harp on this theme?

I’ve been burned – and burned badly – by not protecting the downside.  I can relate first hand to what he’s talking about.  Had I never been burned, I would probably have skipped over this advice.  I probably would have discounted it as “common sense.”  Everyone knows to do it.  No need to bother.

So, how do you “protect the downside?”

Here’s a sample of what he says …

• Before you take any risk, however, you must understand that risk.
• And, you have to know, in detail, what the world will look like should everything go catastrophically wrong.
• I am not saying ‘Don’t take risks.’
• I’ve taken risks that could have severely damaged Virgin.
• What I’m saying is this:  They were calculated risks – risks I and the people around me were willing to take, once we had taken everything into account.

So, next time I enter a business deal, I’ll remember this man and his “first rule of business.”  I will protect the downside.

Our famous businessman is none other than Sir Richard Branson.  I highly recommend his book “Business Stripped Bare.”



There’s no downside …