Looking for Red Flags? Beware. It may be a Trap.

How many times have you heard or said the expression "I'm looking out for red flags."?  I'm guessing your answer is quite a bit.  It's a common expression, and it is a smart thing to do when evaluating something in your business.  It's always wise to think things through and try and identify problem areas ahead of time.  

If you've read some of my other blogs, you have seen more than one that suggests understanding your cost of failure.  In a way, understanding your costs of failure is a way of looking out for red flags. Also, if you think about it, a big percentage of the work of the legal profession is looking out for red flags.  

Red Flag Lookers try and identify potential problems in advance because another expression, "an ounce of prevention is worth a pound of cure" , is true as well.  Looking out for red flags is definitely an effort in preventing problems.

Now that I've explained the expression I'm going to talk bad about it.  

Yes, looking out for red flags is important.  It helps you identify problems that could be avoided.  But red flags sometimes guide your road to failure.  If all you do is worry about bad things that might happen, you may very well talk yourself out of doing anything.  Or worse, being fearful and unenthusiastic about a really good idea.  

As a business owner and entrepreneur, you simply can't have an attitude dominated by worry of what might happen.  Instead, you have to continually be looking for green flags.  Opportunities to sell or service customers.  

Whereas red flags potentially point to problems, green flags point to opportunities. Green Flags are what lead you to success.

No new business ever made it with the founder just looked for red flags.  Every single one that made it did so because the founder identified green flags.

Here's an example of a business failing due to too much red flag looking:  Kodak was one of the great companies of the 20th century.  They dominated the film and photography industry.  It wasn't even close.  They sold film like crazy and totally dominated the industry.  

In the 1970's, they led in research and the development of digital cameras.  But wait.  The bean counters saw red flags.  If digital cameras were the future, Kodak would lose film sales, which were the big profit driver of the company.  These red flags caused years of decisions that led to years of Kodak's low enthusiasm for digital photography.  

Other companies embraced the digital technology and soon passed Kodak.  There was no looking back, and Kodak began a long decline which resulted in their bankruptcy in 2012.  Kodak's original ref flag looking was to prevent a loss of film sales.  The end result was that they lost everything.  

I'm not suggesting that you only look for green flags and throw all red flags out the window.  Not at all.  There is a healthy balance, but that balance has to include lots of green flags.