A recent article in the New York Times (Nov. 19, 2007 NYTimes.com, “Goldman Sachs Rakes in Profits in Credit Crisis”) discussed Goldman Sachs’ uncanny ability to foresee doom and adjust investments accordingly to profit off of the panic.  The article noted the power of the risk controllers within the firm, which constantly reevaluate the firm’s investments.  This paranoic devotion to managing risk paid off handsomely in the early summer, when the firm decided to reduce its exposure to mortgage-related investments months before the bottom fell out of the subprime market in late summer.  As a result, Goldman protected its profits and increased them while others hemorrhaged red ink and heads rolled at firms like Citibank, Merrill Lynch, and Morgan Stanley.  This constant reassessment of risk/reward should be applied to any entrepreneur’s investments and business interests.  Capital is critical in starting and maintaining a successful venture.  Learning to cut your losses and walk away may be painful, but could ensure your business survival for the future.   A friend recently closed a retail store that he had invested in some years ago.  Sales were down precipitously and expenses were high and rising.  The 3 or 4 managers who had managed the store over the last several years were unable or unwilling to focus on the bottom line, i.e., increasing sales and gross margins, cutting costs, and turning inventory.  The general manager pleaded with the investor to keep the store open, contending that he could turn things around in 6-8 months.  However, the investor prudently decided to recoup his capital by liquidating assets and closing the business.  One, there was a high level of pricy inventory, high costs, and declining sales.  Also, because the investor lived six hours away, he was unable to gauge the daily operations of the store.  The store had positive attributes - it was one of two luxury retail stores in town and was a local institution for nearly 50 years.  However, the risk/reward balance was simply too high.  So, just like this investor and Goldman Sachs, constantly reevaluating business interests and capital allocation is not a bad way to go.