What is your strategy for determining risk versus reward when faced with a potential investment in a new business unit or a new business line?
Fong
“The common misperception is that risk and reward are symmetrically related. While they are correlated, reward is really the product of how well risk is managed. The two most important considerations for me when evaluating an investment, large or small, are how much control I have over the risk factors and the value I can add to the equation. If I have a reasonable degree of control over the risks and my participation contributes positively to its success, the only other consideration is whether the upside is worth the effort.”
Marcos Fong
Group CEO
Coca-Cola Beverage Co., Foremost Foods Inc., Glimpses of Guam Inc., Good To Go We Deliver, Subway Restaurants and Chili’s Grill & Bar
Gianan
“I always look at the demographic; the population of Guam. Our business is very local based. I pretty much knew that being at the [Agana Shopping Center] marketplace, overtime there’s nothing stopping anybody from opening another store just like it. I had to look at our demographic and where they stay the most. A majority of our customers are from the north. The risk is of course higher rent, just the overhead in general; having to hire more staff, but I knew that with the foot traffic and basically the marketing we would get from just by being [at the Micronesian Mall] would outweigh that risk eventually, as long as I was able to really know my customers. Another thing I didn’t expect was the tourist market. Now we have a bunch of Korean and Japanese customers that seek out our items as well.”
Louise Gianan
Owner
Obsessed Guam
Pangelinan
“My strategy for deciding whether to pursue a new business idea or a new product line is all about ROI. I start by doing a SWOT analysis and create pro forma statements to get a clearer picture of the idea’s potential. While I trust my instincts (because sometimes you just know), I always back it up with solid data to make informed, strategic decisions. So when an idea excites me, I jump in with passion, but I always make sure the reward is worth the risk and aligns with my goals.”
Giana Pangelinan
Owner
Accounting Management Solutions LLC; Guam Baby Co.
Manglona
When evaluating a potential investment in a new business unit or line, my strategy involves balancing risk versus reward through a structured approach:
- Market research: Analyze market size, growth potential, competitive landscape, and customer needs to assess demand and competitive risks.
- Financial analysis: Develop financial projections, calculate ROI, NPV, and payback period to gauge potential returns and financial viability.
- Operational feasibility: Evaluate the organization’s capacity to support the new venture, including resource requirements and integration with existing operations.
- Risk assessment: Identify potential market, financial, operational, and regulatory risks, and develop mitigation strategies.
- Strategic alignment: Ensure the investment aligns with the company’s long-term vision and strategic goals, considering sustainability and market evolution.
- Decision-making: Engage stakeholders, consider their input, and make a data-informed decision based on risk tolerance and strategic objectives.
This approach ensures a comprehensive evaluation of risks and rewards for informed decision-making.
Benita Manglona
CPA and Founder
Manglona CPA PC
Mateo
“I always tell myself, if there is no risk there is no reward. You don’t want to think too much about [it]. There [will be] times where you think, ‘What if I fail?’ or ‘What if I don’t do good?’ But don’t let that discourage you and don’t let that get to you too much because it will get into your head. Just do it and just go and move forward. Follow your dreams and follow your plans.”
Anica Mateo
Co-Owner of SKN Guam
Owner of Get Glammed GU
Hermosa
“My basic strategy for evaluating risk versus reward comes down to two critical factors: market size analysis and operational risks. For market analysis, I look at the attractiveness of the market, the competitive landscape, and the demand for the product or service. When considering operational risks, I concentrate on one specific aspect. How dynamic is the supply chain for that specific business?”
Charlie Hermosa
CEO and co-founder
Bella Wings Aviation
