Know When to Double Down in Business Running a startup can resemble playing a game of blackjack. Be savvy and strategic yet willing to take risks at the right moment.
Opinions expressed by Entrepreneur contributors are their own.
Blackjack tables host a variety of gamblers, ranging from the novice to the know-it-all. In the game of blackjack, luck plays a role, but there are ways that wise players can increase their chances of success.
The same is true in the world of business. Knowing the following basic strategies can help you avoid a bust:
1. Establish your strategy and stick to it.
New players would do well to study a blackjack strategy chart, an outline of the most mathematically correct moves to make in any situation. When playing, I always try to not deviate from what the chart suggests.
I find this a good rule of thumb in blackjack -- and in business, too. Determining your strategy ahead of time removes emotion from the decisions you make, so heat-of-the-moment choices become less stressful.
Simply default to the tactics you already chose during moments of calm and patience.
2. Know what you're willing to lose.
It's a sad but common sight to see a down-on-his-luck gambler left with few remaining chips at the table. The shorter a player's stack, the more dependent he or she is upon the luck of the draw. In business, as at the blackjack table, this is an awful place to be in.
How do players and companies find themselves in this spot? Part of the blame falls on insufficient discipline to walk away from a bad situation. To counter this, know how much you're willing to invest and predetermine your exit point to avoid getting in too deep.
3. Don't risk everything on a hunch.
Betting it all on a single hand is the ultimate gamble, yet you've probably witnessed both blackjack players and business leaders try. A company bets big on a new acquisition or product, only to lose and jeopardize years of work.
To avoid this, initially test new ideas on a small scale to prove worthiness and minimize risk. In Great by Choice, Jim Collins describes this strategy as fire bullets, then cannonballs.
Related: 7 Risks Every Entrepreneur Must Take
4. Don't listen to the naysayers.
Unsolicited advice seems to be offered constantly in both the worlds of blackjack and business. Too often I've seen a player depart from a smart strategy just to appease an opinionated gambler at the table.
I've observed the same in business. Leaders frequently base decisions on strong, yet uneducated opinions from outsiders. Always play out your strategy your way. You're the one who must live with the results. Remember that you know your business better than anyone else.
5. Guard against the arrogance of success.
Everyone knows that excessive losing can cause a player to act irrationally. So can a hot streak. To this end, players on a winning run might be tempted to deviate from their strategy. Remember that losing is always a possibility and is often more likely when a mind is clouded by confidence.
6. Don't take it out on the dealer.
When things go south in blackjack, it's often easiest to blame the dealer, even though he or she is simply doing a job. There will be ups and downs in cards, in business and in life.
It's important to handle each with class and treat people with respect. Bad behavior directed at an employee or colleague when the chips are down is a direct reflection of your character.
7. Know when to double down.
In blackjack, some situations arise when it's mathematically in a player's best interest to double down, as outlined in Edward Thorp's book Beat the Dealer. This means doubling the bet or risk for the chance to double the payoff.
Yet, some players choose not to take the risk no matter how calculated.
My advice is simple: Know when to double down and maximize your opportunity for a big payday. What's the point of playing if you're afraid to make the aggressive move?