Most people consider starting their own business to be one of the riskiest ventures possible. Of course, most people are not entrepreneurs. True entrepreneurs know that successful startups are all about controlling and managing risk. Your entire perspective revolves around doing whatever it takes to identify threats and obstacles and find your way around, over, or through them.
The risks perceived by non-entrepreneurs cover four basic areas: financial, professional, personal brand (ego) and lifestyle. Financial risk is the obvious concern. They worry that the failure of a startup will lead them directly to bankruptcy court. Of course, there are many ways to protect yourself and your personal assets … keeping your personal and business finances separate is just common sense.
Personal and professional brand risk is also a cause for concern. People are afraid that if they go out on their own and fail, they will lose traction on their previous career path and will be known as the one who failed. In fact, if you’ve built a solid reputation and good networking relationships, getting back into the workforce won’t be that difficult (except once you’re self-employed, it’s very difficult to inform someone else!). And those who consider it a failure because their startup failed are the kind of people who downsize others just to feel better about themselves. Most people, especially those close to you, will consider you a hero even for trying!
Ideas about lifestyle risk are generally quite accurate. Startups occupy all of your thoughts and most of your time. You probably won’t see much of your family and friends during the early stages, and when you do, you probably won’t be the best company (unless they want to talk about your business). You will likely be a walking stress ball until your company takes off, and there is a chance that you and your family will enjoy Ramen noodles at every meal for a few months. But all of those lifestyle changes pay off more than once once your business takes off. As our favorite quote says, “Entrepreneurs are people who are willing to live like most will not live like most cannot.”
There are a number of specific actions a new entrepreneur can take to mitigate these risks and make them manageable, if not imperceptible. First, take the time to really plan your business idea. Dig into the details of every aspect of your business, break it down, and find better, faster, and smarter ways to get work done. Second, be realistic about the financial repercussions of going out on your own. If you start a business without working capital, it will go broke during the early stages. If you dedicate all your personal resources to the effort, is it so putting them all at risk. If you don’t learn to manage finances, both personal and business, you will have a hard time finding success in either area.
Third and last, learn all you can about the fundamentals of business and the details of what you want to do. Striking a balance between actual operations and the business of running a business is a critical, but often overlooked, need to control risk and find the success you seek.
