Most people consider starting your own business as one of the riskiest undertakings possible. Of course, most people are not entrepreneurs. True entrepreneurs know that successful startups are all about controlling and managing risk. Their entire outlook revolves around doing whatever it takes to identify threats and obstacles and find the way around, over, or through them.
The risks that non-entrepreneurs perceive cover four basic areas – financial, career, 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 business and personal finances separate is just plain common sense.
Career and personal brand risk also cause worry. People are afraid that if they go out on their own and fail, they will lose traction on their previous career path and become known as the one who failed. In fact, if you have built a solid reputation and good networking relationships, returning to the workforce won’t be all that difficult (except that once you work for yourself, it is very difficult to report to someone else!). And, those who consider you a failure because your startup floundered are the type of people who cut others down just to feel better about themselves. Most people, especially those close to you, will consider you a hero for even giving it a shot!
The ideas about lifestyle risk are generally pretty accurate. Startups take up all of your thoughts and most of your time. You will probably not see your family and friends very much during the early stages, and when you do, you will probably not be the greatest company (unless they want to talk about your business). You are likely to be a walking ball of stress until your venture gets off the ground, and there is a possibility that you and your family will be enjoying Ramen noodles for every meal for a few months. But all of those lifestyle changes pay off in spades once your company takes off. As our favorite quote states, “Entrepreneurs are people who are willing to live like most won’t in order to live like most can’t!”
There are a number of specific actions a first-time entrepreneur can take to mitigate these risks into something manageable, if not unnoticeable. First, take the time to truly plan your business idea. Dig into the details of every aspect of your venture, break them down and look for better, faster, and smarter ways to get the job done. Second, be realistic about the financial repercussions of going out on your own. If you start a business with no working capital, you are going to be broke during the early stages. If you commit all of your personal resources to the effort, you are 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 finally, learn all you can about the fundamentals of business and the specifics of what you want to do. Striking a balance between the actual operations and the business of running a business is a critical, but often overlooked, necessity to controlling risk and finding the success you seek..