Are Entrepreneurs Evel Knievels?

Myth: Entrepreneurs are risk takers, like Evel Knievel.

The Truth: The derivation of the word “entrepreneur” includes the concept of ‘risk-taking.’ And many people assume that entrepreneurs (small business owners) are risk-takers. But look carefully at this assumption. What kind of risks does a new business owner take that the “average” person working for a company not take?

Which is more risky? Well, you could lose your company if you don’t do a good job of managing cash flow and getting in customers/clients. But, if you worked for a big company for 30 years, you could get laid off just before you retire.

Life is Risk. A person who uses personal funds to start a business may be risking retirement funds on a business venture. But if that same person sits around and “rusts out” he’s taking a risk of dying before he really does anything interesting or rewarding. Or she may get a terrible disease and have to spend all that money on health care.  Which is the greater risk?

As John F. Kennedy said, “There are risks and costs to a program of action, but they are far less than the long-range risks and costs of comfortable inaction.” It is a bigger risk to do nothing than to become an entrepreneur.

Taking calculated risks. I would like to believe that entrepreneurs take calculated risks. That is, they weigh all the possibilities, write up a great business plan which includes all of the financial projections, start carefully and frugally so as not to run out of capital…and then only take the plunge when they see that they have a reasonable chance to succeed. The SBA includes “calculated risk taker” among the attributes of successful entrepreneurs.  Evil Knievel didn’t just jump on a motorcycle and take off over a bunch of barrels.  He carefully planned his jumps, using his knowledge and experience and skills.  Before he took off, he had a pretty good idea where he would land.

So here’s my question - If you are sitting around thinking about starting a business, why not take the calculated risk and do it? If you are worried about where you will land if you spend your time and money on a small business, where will you land if you don’t?