When you're running a small business, the pressure to innovate feels paralyzing. You see competitors launching new services, read about market disruptions, and wonder if you should pivot entirely.
But here's the truth I've learned coaching hundreds of solopreneurs and small business owners: the biggest innovations rarely come from betting everything on one big idea. They come from making small, smart bets you can afford to lose.
Risk Isn’t the Enemy — Unmanaged Risk Is
Reid Hoffman, co-founder of LinkedIn, put it perfectly: "An entrepreneur is someone who will jump off a cliff and assemble an airplane on the way down."
But he also said something less quoted and more practical: "If you're not embarrassed by the first version of your product, you've launched too late." The key isn't reckless risk—it's rapid, low-cost experimentation.
A Real-World Example of Small Bets Paying Off
I watched this play out brilliantly with a client who ran a boutique photography business. Instead of investing $15,000 in a studio expansion, she made five small bets of $500 each: offering sunset beach sessions, corporate headshot packages, pet photography, real estate shoots, and family documentary-style sessions.
Three flopped. Two took off—corporate headshots became 40% of her revenue within a year.
Total risk: $2,500.
Total discovery: a business model that tripled her income.
Why Small Bets Win (The Data Behind the Strategy)
This approach isn't just anecdotal wisdom. A Harvard Business Review study of 50 corporate ventures found that companies using a portfolio approach to innovation—making multiple small bets rather than large single investments—had 2.6 times higher success rates.
Why? Because small bets let you learn quickly, fail cheaply, and scale what works.
Small Bets Create Permission to Learn
Sara Blakely, founder of Spanx, started with $5,000 in savings and a simple prototype. She didn't lease manufacturing facilities or hire a full team. She made a small bet, tested the market, learned from feedback, and scaled iteratively.
"Don't be intimidated by what you don't know," she said. "That can be your greatest strength and ensure that you do things differently from everyone else." Small bets give you permission to not know everything upfront.
Three Rules for Small Bets That Pay Off
The challenge for small business owners is knowing which bets to make and when to kill them. Here's the framework I share with every client:
Three Rules for Small Bets That Pay Off:
Set a Clear "Kill Criteria" Before You Start
Decide upfront what success looks like and what failure looks like. Write it down. "If we don't get 10 inquiries in 30 days, we stop." "If conversion is below 5%, we pivot." This prevents the sunk cost fallacy where you keep pouring money into something because you've already invested.
Seth Godin calls this "picking your dip"—knowing the difference between a temporary setback and a dead end. One consulting client launched a group coaching program with a kill criteria of 5 paying participants. She got 3. Instead of running it at a loss, she offered 1-on-1 coaching to those 3, learned what they actually needed, and relaunched six months later to 20 participants. The first bet "failed" but taught her how to succeed.Cap Your Investment at 5-10% of Revenue
Never bet more than you can lose without damaging operations. If you're making $100,000 annually, your innovation budget is $5,000-10,000 spread across multiple experiments. A restaurant owner I coached wanted to add catering. Instead of buying a cargo van and hiring staff, he spent $800 to cater three small events using his existing kitchen and delivery apps.
The demand was there. He scaled gradually. Had it flopped, he'd lost less than one week's profit.Scale Winners Aggressively, Kill Losers Quickly
The data is clear: according to CB Insights, 42% of startups fail because there's no market need. Small bets reveal market need fast. When something works, double down immediately. When it doesn't, move on without guilt. I've seen too many solopreneurs nurse dying ideas for years because they "invested so much already."
That's not perseverance—it's financial self-harm. As Sheryl Sandberg wisely noted, "Done is better than perfect." Test imperfectly, learn quickly, and scale what resonates.
Think of yourself as a venture capitalist with a portfolio. VCs expect 7 out of 10 investments to fail or break even. But the 3 that succeed return enough to make the whole portfolio profitable. Your small business works the same way. That new service you're considering? Don't bet the farm. Make it one of five experiments this year.
Amazon's Jeff Bezos built an empire on this philosophy: "If you double the number of experiments you do per year, you're going to double your inventiveness." You don't need Amazon's resources. You need their mindset: test more, risk less per test, and let the market tell you what works.
Innovation isn't about one big heroic leap. It's about making enough small, smart bets that eventually one or two transform your business. And the best part? You'll still be in business to enjoy the wins.
