Growing competition in small businesses is a cause for global concern. As of 2022, there are more than 32.5 million small businesses in the USA, yet data shows that only 48.9% of small businesses survive for longer than five years. This fierce market has business owners on their toes trying to make the right decisions in order to grow their businesses.
For that reason, small business entrepreneurs often look towards the most ingenious of places for inspiration. One such source is, surprisingly enough, poker, where most players have to be very skilled and display great business acumen as players in order to get high returns.
See Andy Beal, a mathematician, banker, and poker player. Poker star Beal’s projected net worth is $12.2 billion, and while not all of that is attributable to poker, he’s still known for winning the largest hand on public record. In Michael Craig’s book about this match, Craig cites Beal’s experience and skills in poker worked hand-in-hand to boost his business skills, and vice-versa.
Here, we delve a little deeper into these lessons that poker can teach business owners.
Building a brand
Branding creates memorable impressions. Branding can depend on your performance, but this doesn’t mean that business owners have no control over the matter.
When it comes to creating images, poker players are the experts at bluffing. After all, faking hesitation or confidence by making a bet or raise is the essence of getting your opponent to fold a better hand for you to win the round.
Building a business brand is similar — Poker pro Wayne Yap suggests elevating your credibility or borrowing it from others. Join hands with other successful entrepreneurs and experts, and you’ll find that sometimes “faking it” is the best path towards “making it.”
Considering the scenario
Every Poker move is calculated based on possible, even limitless, outcomes. Market demands are constantly changing and similarly difficult to predict.
Poker players and small business owners have to stay one step ahead of the game by factoring in every possible eventuality. Study up on the trends of the industry, along with your competitors, in order to anticipate risks and potential investments.
Dealing with pressure
Assessing the situation is important, but more crucial is the attitude during and after. Stakes are always high in poker and business, especially because losing your investment is a big possibility.
However, stress can be self-induced, and research by the Small Business Administration explains that good management and organization is the key to mitigating this. Great poker players, and great business owners, understand that pressure should instead work as motivation to analyze the available cards with a clear mind.
Risk is always present during poker because every victory comes with a price. It’s simply a matter of dealing with and calculating risks. Business owners are the same way with turning investments into profit instead of losses.
Our previous article on Practicing Risk Management discusses having insurance for your business. This ensures protection during catastrophes or accidents, and can include indemnity insurance to employee compensation. Similarly, poker players exercise the same skill by selling equity of their hand to an outside party. This guarantees a payoff in case the player loses the pot, which sets them up for another round.
Never chasing losses
While taking risks can be good, you should also know when to call quits. Some poker players tend to bet continuously, despite losing three hands in a row. We also see this in the business world, where business owners chase after sinking ventures to try to make up for losses, but eventually lose even more.
Take note of the sunk-cost fallacy: abandonment will always be more beneficial than prolonging defeat. Regroup and reassess. Return to the scenario with a calm and pressure-free mind, and then plan out your next steps to success.
Just like in business, great poker players don’t just go with the flow. Taking an active part in understanding business and the game can go a long way. In poker and business, success is always possible — as long as you know how to play your cards right.