speaker-0: So think like, can I survive the downside? How long is it going to take me to recover? Is there a margin baked into this? You know, to your point. It's, I don't think it is a one size fits all. But there is an intentional way you can evaluate, in my opinion, knowledge is power. So the more you can educate yourself about the subject matter or whatever it is you're pursuing, and then have the framework of. Okay, well let's play these scenarios. This is all the upside opportunity, but what's the downside? And how am I evaluating each downside according to that upside? And and how risky is each one? And what are the primary downside factors or you know, the secondary? And really do a thoughtful analysis is going to help you put yourself in a better situation. Welcome to Return on Design, the podcast where beauty meets strategy. And interiors become assets that perform. I'm your host, Rachel Niederhofer, designer, investor, and builder of high-impact spaces that deliver real results. Alongside my husband, I run both a design firm and a real estate investment company, where I live at the intersection of creativity and ROI every day. Each week, I'll be unpacking what most people overlook: how strategic design decisions can grow your investment, elevate your lifestyle. And unlock the full potential of your property. You'll get real tools, proven strategies, and unfiltered conversations with industry experts who are doing it right. So if you're ready to invest with purpose and leverage design as a powerful tool, this podcast is for you. Essentially, that is the mindset framework that I'm articulating. I'm how I view projects, how I view assets in general. It's that financial background of opportunity, forecasting opportunity and pursuing it, you know, aggressively, but not apart from hedging risk. Because everything in life comes with risk. Yeah.

speaker-1: It does. It's risk dry getting in the car and driving down the street to the store. Exactly.

speaker-0: And you hedge that risk with a seatbelt and airbags and speed limits and all the things that are in place to try to mitigate any extreme risk situation. For our listeners, if you can wrap your mind around like this is how you have to view this, because if you're only viewing ⁓ interior design as an example from an end pretty aesthetic, you know, you're you're missing it, in my opinion, because there's a lot more. Depth and yeah, depth to how you should be evaluating it. And from an entrepreneur standpoint, it's not just, ⁓ I'm going to risk it all to start this business. However, it does require, you know, if you're gonna really pursue purpose and your dreams, odds are you're gonna be pushed out of your comfort zone and you're going to have to step into a level of risk that is new to you. And then as soon as you get that under your belt, you're gonna wanna go further and you're gonna step into another level of risk.

speaker-1: And you know, just for clarification on that too, it's not like as an entrepreneur, entrepreneurs are not out looking for the what's the next big risk, you know, that we can take. I know that's certainly not what we're doing, but what we've what we learned to do is mitigate those risks and how can I protect what I'm building and and gain and continue to grow what I'm building here. Yeah. Entrepreneurs don't love big risks. They love how can I protect it? And a lot of times actually are looking Even looking for the ways of why should I not do this deal. Right. I know I know every deal that we look at, we yes, we look at what is the potential upsides, what is how big can this be? What's maybe an expected range that it could be and what's a low end range. But okay, what are you know, we also have to look at what am I missing? What what do I not see? What could go wrong here? And can I really protect and hedge that part of my risk? And that's something that, you know, with my engineering corporate background, that's what I had to do. If this goes wrong, this is millions of dollars down the drain or

speaker-0: Or worse. Well, and it's a mindset. It's how you train yourself to evaluate. Once you learn how to s it' to view the world through that lens or view the you know scenario, yeah, then it becomes a practice where you can evaluate and take it over and over and over.

speaker-1: I'll take I'll take that a step farther. My my job was to look at what what could go wrong and if it went wrong, like how bad it could be. But ⁓ my the next step to that was to if it were to start going wrong, how can we fix it quickly? Right. What do we have in place? That's how that's the that's the pivot, that's the mitigation, that's the so that it that doesn't happen. Right.

speaker-0: Which is why when it comes to renovation projects or design projects, it's important that you go, you think through the same scenario. Yeah. Because there is a level of planning, preparing, and preparing for not just the good, but what are the what are the other scenarios that could be happening? I mean, this is very heavy too when it comes to interior design and commercial spaces and coding and all the regulations, you're you're evaluating spaces and designing based off of the code required. Where does the code come from? It comes from, well, what could happen if we go over this threshold, what could the outcome be? And so you're it's the same thing. You're hudging the risk, you're mitigating, and you're making decisions around that principle as well. This might be a little bit more challenging to

speaker-1: Based on all of that.

speaker-0: To give like a specific answer. But for our listeners' sake, I'm sure people are wondering, okay, yeah, we get it. But what is the right level of risk? Like, how much is can I actually take, take on? Like, is there a threshold? Is there a marker? Is there something where people can understand I'm taking it too far or this uncomfortable feeling is okay to still move forward?

speaker-1: I don't know that there is a 100% right answer in that. And I think that all boils down to a personal tolerance, your your situation, your life. What are you trying to build and what are you trying to accomplish? And what level of risk are you willing, willing to accept? I mean, let's ask you, let's I guess try and rephrase this a little bit too of everybody you know, so many people like to go to Vegas and go gamble. What's the one rule everybody I I don't know you've probably heard this a million times. If you're going to get do not gamble more than you're willing to lose. If you can't afford to lose it, don't risk it. Don't risk it. And everybody's tolerance and everybody's ability and that number for everybody is different.

speaker-0: So think like, can I survive the downside? How long is it going to take me to recover? Is there a margin baked into this? To your point, I don't think it is a one size fits all. But there is an intentional way you can evaluate. And in my opinion, knowledge is power. So the more you can educate yourself about the subject matter or whatever it is you're pursuing, and then have the framework of, okay, well, let's play these scenarios. This is all the upside opportunity, but what's the downside? And how am I evaluating each downside according to that upside? And and how risky is each one? And what are the primary downside factors? Or, you know, the secondary and really do a thoughtful analysis is going to help you put yourself in a better situation. And I think real estate making a purchasing a piece of real estate is a great example, real world example where you can say, okay. I see the property. This is what I'm willing to pay for it. You can put in the offer. Let's say you get the contract, and now you go into due due diligence and you begin to see other issues that create greater risk than you originally thought when you made the offer. And so now you can evaluate: okay, here's the opportunity, which is built into my existing offer. But now there's these different risk aspects that I have to consider. And what is the cost of each risk and how can I mitigate that risk. And so you would go back if need be in order to mitigate it. And you would come down on the original purchase price. And so it's that up and down, almost a scale type of visual where the more I've educated myself about it, the more I understand the risks that could be associated, the more I adjust to mitigate the risk accordingly. And you can use that same framework, you know, universally. whatever whatever you're doing, whether it's quitting your nine to five job to start your own business, same mindset you can evaluate, whether you're hiring a builder to build your dream home or buying your first, you know, investment property, like a rinse and repeat mindset.

speaker-1: It's like working out. It's it's building yeah. It's building the muscle. It's building the the mental muscle, the understandings, the techniques so that you can do this again and you can get big you can get better, you can get stronger. And and the yes, the more you know, the more you can educate yourself with it, the better you can make those decisions. Not knowing every every little possible scenario because again, as we've said, there is no guarantee to everyone.

speaker-0: Or to anything for that.

speaker-1: I mean But it doesn't mean you don't make any

speaker-0: Yeah. You can't live a stagnant life and reach your goals. Yeah. And even from a design perspective, like this is why design development takes months upon months upon months before you ever start doing anything because you're going through really understanding what you're trying to accomplish and making decisions to reach the goal and mitigate the the yeah, the risk associated. I feel like we've really covered a lot today. We might we might have to encourage people to listen to this one again. Make sure you're digesting it. And to your point, it's like lifting weights. You're training your mind how to think. And this is exactly why we talk about removing the emotional charge that can be associated with purchasing or mainly purchasing, designing, things like that. This is exactly why. Cause you've got to give your yourself time to evaluate. From a I would say a higher viewpoint. A higher

speaker-1: Viewpoint or a more a more grounded perspective. Because you know, you you don't want to view it from the emotional high of everything. Yes, you want the 50,000-foot view to see everything, but you you have to make the decision from a I'm I see it and I'm I'm grounded, I'm calm, I'm ready, I'm clear-headed, you know, all the things, and you know, you have to remove that that emotion that charges us. You know, rational decisions oftentimes don't work out.

speaker-0: There you go. That's a good one to say.

speaker-1: You know. The ra the rash decision, you know. Yeah. You know, the your rationale behind the the impulsive is not your that's not your greatest friend.

speaker-0: Rational decisions? ⁓ crash. Yeah, yeah. Well, I hope that you're feeling encouraged today to maybe step into the unknown, whatever that looks like for you, and have a fresh perspective of, you know, risk, what it's like for entrepreneurs, how we think, how we navigate risk, hedge it. And maybe it will encourage you to like step out and maybe pursue something you've always wanted to and ⁓ you know, dip your toes in the water. But if you are liking what you hear. Please make sure you are subscribed to our channel where we are rolling out content every week, sharing about entrepreneurship and design and investing, and of course, how to work them all together cohesively to make sure you are getting a return on whatever you're doing. So make sure you are also following us on our socials at Real Return on Design. And thanks for listening. We will see you next time.

speaker-1: See you all later.