Remember in 1985, when the first Blockbuster Video was established? It was revolutionary and seemed safe from business risks. 

Friday nights meant one thing to most families: a trip to a Blockbuster Video chain. It was the king of the video rental world for decades, with thousands of stores nationwide providing a comprehensive catalog of new and old movies.

People everywhere fell in love, and Blockbuster Video quickly became the leading rental company.

Until Netflix came along, that is. They offered a convenient, affordable way to rent movies by mail, and people loved it.

Thanks to its innovative business model, Netflix is now the world's leading streaming service. They saw the writing on the wall and made the right moves. Unfortunately, Blockbuster Video didn't, and they paid the price.

It's a story that's been told time and time again— and it's one that every business owners fear.

But here’s what they don’t tell you after that story.

Anyone can do it.

Here’s how you can propel your business from its humbling beginnings to becoming a global giant like Netflix while embracing all the financial risks. 

This is Next Level Academy, and we are on a mission to eradicate poverty from this world completely. If you like what we do, join our community.

The Spark of an Idea and the Start of a Business Venture

The story of Netflix begins with Reed Hastings, the co-founder, and CEO, who had a personal experience that sparked the idea. Frustrated with late fees incurred at Blockbuster, Hastings realized there had to be a better way. This frustration and a desire to create a customer-centric and convenient movie rental service became the foundation for Netflix.

Netflix had a grand vision. It recognized the potential of the internet and emerging technologies to transform how people accessed and enjoyed movies. Rather than being confined to physical stores, Netflix envisioned a future where movies could be delivered directly to customers' homes hassle-free.

To succeed in a market dominated by Blockbuster, Netflix knew it had to differentiate itself. It understood the limitations of the existing rental model and set out to offer something different— a business risk they were willing to take.

Netflix and Major Business Risks They Took

Netflix's journey is a testament to the power of calculated risks in an evolving economy. They encountered and tackled several significant business and operational risks head-on throughout their launch and subsequent growth. These business risks not only shaped the trajectory of Netflix' business performance but also provided valuable lessons for aspiring entrepreneurs and business owners looking to take strategic risks to make their mark in the competitive market.

1. The Business Risk of Competing Against Blockbuster Video

Back in the late 1990s, the video rental market was dominated by Blockbuster Video. As a new player on the scene, Netflix faced an uphill battle. With no name recognition and a need to convince customers to try their service over the more established Blockbuster, Netflix had to be bold. They recognized that competing head-on would be futile, so they adopted a disruptive approach.

Netflix introduced a subscription-based model that allowed customers to rent DVDs by mail without late fees—a departure from Blockbuster's brick-and-mortar rental system. By leveraging the power of the internet, Netflix offered convenience and flexibility, ultimately winning customers over. They understood that they needed to differentiate themselves and create a unique value proposition to succeed.

The Business Risk of Introducing a New Technology

Another significant strategic risk Netflix undertook was the business risk of being an early adopter of DVD technology. DVDs were a relatively new and unfamiliar format at the time, and there was no guarantee that customers would be willing to embrace this new way of renting movies. However, Netflix embraced different risks and the potential of the DVD-by-mail concept wholeheartedly.

They focused on educating their customers about the advantages of DVDs, among many factors such as better picture quality, durability, and the absence of rewinding tapes. Netflix's commitment to customer education and its seamless DVD delivery system helped them gain trust and loyalty. Their willingness to embrace emerging technologies set them apart and allowed them to capture a significant market share.

The Business Risk of High Start-up Costs

Starting a business from scratch always carries a degree of financial risk too, and Netflix was no exception. In order to establish itself, Netflix had to invest heavily in infrastructure and inventory. Building a vast collection of DVDs and creating an efficient distribution system required substantial financial resources. There was no guarantee of success, making it a huge operational risk.

However, Netflix approached this challenge strategically. They began by targeting a niche market, focusing on avid movie lovers with a higher propensity to rent movies frequently. By honing in on this specific audience, they optimized their resources and grew steadily. Their commitment to scaling their operations while controlling costs was crucial in mitigating the operational risk because of high start-up expenses differentiated them from most companies.

How You Can Apply Netflix's Solutions to These Business Risks

While Netflix's success story is undoubtedly inspiring, you might be wondering how you can apply their solutions to the potential risks that you face in your own business. Fortunately, there are valuable lessons to be learned from Netflix's journey that can guide you in navigating and overcoming different types of business risks. 

Let's explore some common examples of how you can apply their strategies to your own risk management strategy and entrepreneurial endeavors.

1. Differentiate and Innovate:

Netflix's ability to differentiate itself from Blockbuster was critical to its success. Take a close look at your industry and identify areas where you can offer unique value to your customers. 

What pain points can you address? How can you deliver a superior experience? 

You can attract a loyal customer base by innovating and offering something different from your competitors. Invest in research and development to stay ahead of industry trends and constantly seek opportunities for improvement and innovation.

2. Embrace Emerging Technologies:

Technological advancements continue to shape industries at an unprecedented pace. Keep a close eye on emerging technologies relevant to your business and be willing to embrace them. 

Conduct market research to understand the potential impact of these technologies on your industry and explore how they can enhance your offerings. Don't shy away from being an early adopter if it aligns with your business goals. 

By staying at the forefront of technology, you can gain a competitive edge and advantage, which can capture new opportunities for business operations.

3. Prioritize Customer Experience:

Losing customers is always a bad idea because it can lead to lost revenue, decreased brand reputation, and a decline in customer satisfaction. One of Netflix's core strengths lies in its unwavering focus on delivering an exceptional customer experience. Make it your company's ability and priority to understand your customers' needs, preferences, and pain points. 

Invest in building strong relationships and fostering trust with your customers. Leverage data and analytics to gain insights into their behavior and preferences, allowing you to tailor your products or services accordingly. 

You can cultivate your company's ability and reputation for loyalty and advocacy

through consistently exceeding customer expectations, even in a crowded market.

4. Strategic Resource Allocation:

Managing start-up costs can be a daunting challenge for any business. Take a page from Netflix's risk management strategy by strategically allocating your resources. Identify your target market and concentrate on catering to their specific needs. 

By understanding your audience and their preferences, you can optimize your operations, reduce unnecessary expenses, and maximize the value you deliver. 

Keep a keen eye on your financials, regularly make financial statements, review your budget and cash flow, calculate risk, and make data-informed decisions to ensure your resources are effectively utilized.

5. Stay Agile and Adaptive:

The business landscape constantly evolves, and your ability to adapt is crucial for long-term success. Netflix's transition from a DVD-by-mail service to an online streaming platform showcases its agility and willingness to pivot. 

Similarly, be open to changes and opportunities that arise. Keep a pulse on market trends, consumer behavior, regulatory risk, government regulations, and technological advancements. Continually evaluate your strategies, refine your business model, and be willing to pivot when necessary.

Embrace Business Risks, Unlock Success

Netflix's remarkable journey is a powerful reminder that calculated financial risks can pave the way for extraordinary success. By analyzing their approach to competing against industry giants, introducing new technologies, using global risks, and managing start-up costs, you can gain valuable insights that can be applied to your business’ success plan.

Embracing business risks requires a shift in mindset. Rather than fearing uncertainties, or legal and compliance risks, you must view them as opportunities for growth and innovation. Through calculated risks, you can challenge the status quo, differentiate yourself from the competition, and unlock new possibilities.

‍

To further guide you on your journey toward success, we invite you to explore the resources and support we offer at Next Level Academy. Our mission is to empower business owners like you to manage business risks, maximize opportunities, and elevate your businesses to new heights. As part of our commitment, we are excited to offer you a free masterclass exclusively designed for ambitious entrepreneurs ready to unlock their potential.

In this masterclass, you'll gain access to expert insights, proven strategies, and practical tools that can help you identify business risks and propel your business forward.

‍