Follow on Facebook
Follow on TwitterHaving been friends with John for several years, I observed his recent dialogue with Rachel Elnaugh with interest. Of particular interest, was her assessment of his attitude to risk – this being a point on which John disagreed with RE. At first I thought she was spot on, but now I’m not so sure. The point of particular interest is John’s citation of his property business as evidence of his willingness to bear a certain amount of calculated risk – and me thinking that property letting was practically risk free. I now know differently!
Recently, with a view to buying and letting out a house, I have been discussing property investment and Buy-To-Let (BTL) mortgages with Crickett Finance. The experience has brought home to me that there are genuine risks involved in the BTL business, and that at least some of them are not necessarily apparent until you actually get involved. Among the risks involved are tenants defaulting on the rent, and the Bank of England base rate (on which all lending rates depend) rising to a point where the rent would not cover the mortgage. Now, there are background checks that can be carried out on prospective tenants, thus mitigating the risk of a tenant defaulting. Further, fixed interest rate mortgages help mitigate the risk of a problematic rise in the base rate. I have given just two examples, and there are many more.
Having pointed out that the risks can be mitigated, I should note that (as John has pointed out before), it is a feature of the successful entrepreneurs that they mitigate their risks very carefully. Note how on the Dragon’s Den television program, the Dragons (some of the most successful entrepreneurs in the country) always seem to want a large stake in the companies they back. This is because they are mitigating the risk via an arbitrage – they only expect to make money on one in so many such deals, and the deal that makes money has to carry those that make a loss.
Therefore, I conclude that John is willing to take risks – certainly more so than Rachel Elnaugh gives him credit for. However it is important to understand that John, like all good business people, is intelligent both about the risks he takes and about mitigating them.
This was a guest post by Mark Radford of Two Nine Computer Services Ltd. Mark is one of best software engineers in the country and one of the people I’d recruit if I was going to Build A Better Technorati or Create A Search Engine And Beat Google.
Email This Post
This blog is about business opportunities and ideas that I spot, think of or hear about and think are useful and interesting. It is intended to provide ideas and inspriation for you to help you find the right business idea for you to then grow it into a successful business.
Hi Mark
My analysis of John came purely from his answers to the questions in my Profile Test, specifically Q10 which asked about his attitude to risk and debt.
Regards
Rachel
To be fair it’s a fairly generic summary and it’s not going to be 100% correct for everyone.
Looking at questions 10, perhaps there’s room for one or two more options if that doesn’t affect the test too much.
John
Not all the scores from the 61 responses are weighted equally; some of the answers carry some quite high scores…
9 out of 10 of those tested so far say it is an extremely accurate summary of them, which has been pretty much spot on.
Regards
Rachel
I’d agree it’s very accurate about me, but I would say that for question 10 none of the answers is true for me, so my answer was vague.
Your profiling continues to generate a lot of interest though so would you like to write a guest post about it, covering for example, what it is, why someone would benefit from completing it and so on?