How much risk can you take? Depends on what you refuse to lose.

“How do you know how much risk you can take in life?”

A Miami Dolphins player who couldn’t have been more than 25 years old asked me this when I was speaking at the Business Combine two years ago.

I was impressed with this player’s foresight to ask a question that escapes so many athletes and entrepreneurs alike. I answered with a question of my own:

“When you were a kid, how many of you dreamed of making a million dollars one day?”

They all raised their hands, of course. So did I.

Why did I ask that question? Because every one of us has to define our own success to recognize it and to safeguard it from threats of our own making. It’s an especially important lesson for a professional athlete who accumulates unimaginable income in a condensed period of time, and then experiences a dramatic drop in earning power overnight. Along the way, they are subjected to a dizzying array of questionable business pitches looking to separate them from their newfound wealth.

And now entrepreneurs are dealing with that same feeling – but it’s 10x worse. Losses in income, businesses shuttered, struggling to stay afloat while juggling the added responsibility of homeschooling. It leaves us feeling untethered and uncertain. We wonder, “How much risk can I really afford to take with my business right now?”

As we become more successful in life, we all tend to move the goalpost on ourselves. This impulse can be very useful in propelling us to strive to even greater heights, but it can also drive us to squander what was once the very object of our affection. The high of success can quickly turn to piles of debt and the sinking feeling of regret.

There’s a liberating confidence that can be harnessed when an entrepreneur or an athlete takes the time to quantify the difference between “wants” and “needs,” something that becomes increasingly important in an uncertain environment. If the world went to hell (and if this isn’t hell I don’t know what is), does anybody really “need” a Mercedes, or might a Honda Civic get you where you need to go?

It brings peace to establish your own financial bright line. I told the athletes that I regularly remind myself of a moment in time I never want to return to, and a place I never want my kids to visit.

I was 9 years old, shaking with fear at Housing Court in Queens, New York. My single mother was destitute, and we couldn’t pay our subsidized rent. I squeezed her hand as she pleaded with the judge not to evict us for 30 more days. I was helpless, maybe soon to be homeless, and at the mercy of the system.

Nope, I will never go back there.

The players nodded. Each one had a place and a moment in time that made them shudder. The answer to that young player’s question is that once you define your unacceptable downside and make the right decisions to lock in your gains, then you are free to peacefully take risks.

So to all the business owners out there who may have already lost so much, wondering how much risk you can afford to take right now, remember, you built your business from the ground up; you have what it takes to do it again. Define what you absolutely need as narrowly as possible so you move from a position of fear to a position of strength.

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