High profits equal to high risks.

There is a fairly obvious fact that risk is directly proportional to profitability. More risks give potentially higher returns.  If the risks are low, expect low profitability.

There are a few consequences from the statement above that are not apparent to everyone:

1. It is foolish to take significant risks if we do not expect higher than average returns. For example, to pledge your apartment to open a cafe is unreasonable.

2. If you want to make some money, you don’t need to come up with “unique, unparalleled ideas” – the risks are too high that those ideas will not work. On the contrary, take the most widely used business model and implement it in the space with unsatisfied demand.

3. “I have an idea on which we will definitely make lots of money”, – is an oxymoron. Either “definitely” or “lots of money”, but not both at the same time.

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