When I started my business at age 22, I had no mentor. My business grew very quickly, and I was desperate to find some "models" of good retailing in Chicago that I could learn from. I settled on four that I watched. They shared incredible market presence, and they were legendary institutions of Chicago.

I watched how they handled their customers, their marketing, their product and service offerings. It helped me envision how I should shape my company as it got bigger. Thirty years later, three out of those four legendary institutions are gone. Victims of a change in business climate? To a degree. But, mostly, I think, victims of their own hubris. They got big. They needed to get even bigger, and they needed to do it fast. They initiated major expansion plans. They borrowed and invested money. They got away from the core of what had made them successful.

You see it all the time. It happens in really big businesses; it happens in smaller ones. My guess is that one of the prime culprits is usually a lack of fear, healthy fear. It's the same thing happens with race car drivers -- they might take a risk of a little crash but they don't want to take the risk of a big one.

But for a business, how do you decide how much risk is too much? Here's my determining factor: Can I afford to take the hit if things go wrong? Or am I betting the ranch? I don't know if you can be prepared for the perfect storm, but you should at least be prepared for a storm.

How do you decide?