Low Probability Shots (April 2022)

In almost every sport, there are high probability shots or plays and low probability ones. I’m relatively new to the world of hockey as my son started playing three years ago but even I can  distinguish between high and low probability shots while watching a game. Some shots are low probability for almost every player due to distance from the net and angle of the shot. Others tend to vary by player. There are some kids who I’ve seen try the same shot over and over

again and never make it. They just haven’t figured out that the odds are stacked against them on that shot (or that their skills aren’t quite as good as they perceive them to be). Occasionally it’s worth taking a low probability shot. There might not be another option or the clock might be down to the final ticks. But more often than not, the better option is finding a way to improve the odds.

The same is true in business. There are low probability and high probability shots. Recently, I was helping a client secure lease financing. The story wasn’t bad but it wasn’t great either which meant it made sense to only target those lenders where the likelihood of success was high. In this case, people that were known to be able to do a deal with “some hair on it” (i.e., not perfectly clean). The deal will get done but there was a fair amount of wasted time chasing low probability opportunities.

Meanwhile, back at the ranch, as they say, there was a very long list of items that needed attention.  In this case, it would have been far better to ignore the low probability opportunities and chase only the ones with reasonable odds of success. The time saved could have been applied to moving the ball forward on any number of other important items.

Now, you can’t always distinguish low from high probability opportunities in advance.  But there are many times that you can. And when resources (time, cash, capital equipment, etc.) are constrained (and they almost always are) it makes sense to focus your energies where the odds of success are highest.  Invest the time, money and energy that you would have consumed on low probability opportunities on other priorities.

I’ve been providing fractional CFO services since 2003. I’ve figured out what defines a good potential client from one that is not. I don’t need three or four conversations to make that assessment; I can usually do it in one or two at the most.  If it’s not a good fit for me, I try to make a referral to someone in my network that  I think will be able to help (and that will be the topic of a future newsletter).

That’s not to say that you don’t swing for the fences once in a while (obviously, I’ve shifted from hockey to baseball analogies). When the potential payoff is great enough a long shot can make sense. Just make sure you’re balancing the costs versus the likelihood of success and potential benefit

When is the last time you assessed your shooting percentage?

If your business could benefit from fractional CFO services, I would welcome the chance to speak with you. Please give me a call at (314) 863-6637 or send an email to [email protected]

The archive of these monthly newsletters is posted at the Resources section of homza.com

your cash is flowing.  know where.®
Ken Homza
Copyright @ 2022 Homza Consulting, Inc.


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