The Reality of Risk
By its nature, any new business involves risk, so anyone planning
to go into business must be prepared to accept a certain degree
of risk. However, this doesn’t mean a would-be lifestyle
entrepreneur has to be a high-risk taker or gambler; in fact, quite
the opposite. Although the stereotypical (and mythical) entrepreneur
is a big risk taker, the reality is very different. Most entrepreneurs
are comfortable with modest risk but quite uncomfortable
with big risks. Further, most entrepreneurs greatly prefer risks in
which they can inf luence, if not fully control, the outcome.
Joe Mancuso, a professor and author of books about small
business, has studied the issue of entrepreneurs and risk, and
had this to say: Entrepreneurs seem to thrive on the 3 to 1 shot—a
gamble they judge to be exciting but realistic.
Although they are unwilling to gamble on long shots,
they are more willing to take a chance if their individual
skills can affect the probability of success.
A good friend of mine is a wealthy businessperson who has
owned 15 different businesses over the years. He is ready, willing,
and able to invest in new small business opportunities and
does in fact make one or two investments a year, risking several
hundred thousand dollars of his own money. However, he very
seldom invests in the stock market. Money he has that is not
invested in small, privately owned business ventures is invested
very conservatively in corporate and government bonds. For
someone who is not shy about investing in high-risk small companies,
his investment strategy vis -a-vis to public companies
seems uncharacteristically conservative.
When I asked him about this, his reply came quickly: “Sure,
I can buy shares of IBM or Microsoft or any other publicly traded
company. But even if I invested all my money in any one of these
companies, I would not have control nor even significant inf luence
over what happens to that investment. When I invest in a
small company, I’m taking a much bigger risk to be sure, but I
have a good measure of control over how that investment turns
out.” That illustrates the philosophy regarding risk held by many
entrepreneurs: risk is acceptable when I have some control over
the outcome.
So, in essence, you need confidence in your ability to do what
you set out to do, because you’ll have ultimate control and ultimate
decision-making authority. You won’t be able to blame an
incompetent boss or colleague or coworker or anyone else. Further,
customers and clients will come with their own personal
needs and idiosyncrasies. They won’t comply with your needs
and won’t even necessarily be reasonable, at least from your perspective.
Nevertheless, you’ll have to deal with them as they are
and take responsibility for the outcome of your customer relations
efforts.
Email:
info@walmartcom.net
