I’d love to hear how you are redefining risk in these historic times. Do you define risk as entirely financial? Or, is risk a game to you? Is your fear of risk keeping you from achieving your dreams?
I think we as humans are very risk-averse. We’re absolutely afraid of failure. My question is why?? I think we’re afraid of the unknown, we’re afraid we’ll lose our standard of living, we’re afraid we’ll look stupid if we fail, ultimately we’re afraid we don’t have what it takes to succeed. If you’re not starting your new company or pursuing your dream because of risk, I’d challenge you to think differently, rethink and redefine your perception of risk.
What is a healthy redefinition of risk? What about the risk that you live life never pursuing the dream or idea that you’ve always been passionate about - what about the regret you’ll live with? How bad really is it if you fail? Will you still have what’s important in life - your family, your real friends? So what if you don’t succeed? Redefining risk and understanding your worst case scenario isn’t really all that bad is critical to getting your dreams off the ground. I think the risk of regret is something not to be underestimated. Life is too darn short.
Honestly, my fear is different from most people, I’m afraid of living the middle-class life - of being too comfortable, of being incapable of taking risks, of being mediocre in life. I’d rather be penniless and on food stamps or on the other end of the spectrum and extremely rich making a difference for millions of lives because of the risks I took in life. Life is so much more refreshing and invigorating when there is risk involved. Don’t you agree?
I’m not advocating taking unnecessary risks or non-diligent risks. I’m just advocating for you to rethink risk if that’s what is keeping you from pursuing your passions. In these historic times, why should only the government take the big risks with the bailout and the stimulus package? We should be taking a step out of our comfort zones and take advantage of these times to risk a little and dream a little. As much as I like Obama, I disagree with his assessment that only government can get us out of this mess. It takes entrepreneurs who have a different definition of risk from the masses and have creativity. Entrepreneurs will get us back on track. So, redefine risk and stop waiting!
How are you rethinking risk in this environment? Share your stories below.
Risk is a game of calculation that is learned. What is the old saying “Better to try and fail than fail to try”. There are times when I weigh the odds and make my decision. Sometimes I win, sometimes I lose, but each time is a lesson I can take to the proverbial “bank”.
Steve - love the quote.
Excellent post, Andy. As you well know, Jon and I have been struggling with the exact issues mentioned in your first paragraph. Ultimately, though, we came to the same conclusion as you did. So, we’re on the path and it’s definitely challenging, but also very exciting!
Shannon - thanks for the comment. I’m very excited for you and Jon - it’ll be a great adventure!
As I run my own sole proprietor now, there are always questions like: if the reputable and big brands are not doing this or that, how sure am I that it will work?
But the fact is, if I had to wait until somebody else prove an idea before I get into it, I am already losing market share. That also automatically means losing the freshness and marketing edge in some cases.
My fear? That people dare not try new things even if it works against the practices of major players. We have seen so many times how a radical new philosophy can cause upset to the entire industry - and what’s even more ironic, coming from a little-known nobody compared to the top guns.
I’m a real believer that the small entrepreneur has an advantage against the big players - they’re faster and more creative. Go for it.
Unfortunately, I didn’t decide until well into my 20s that I wanted to go out and run my own business. By this time, I had a wife, 2 kids, and a mortgage. Due to this life situation, my tolerance for risk is a lot lower than it would have been during my early 20s. To compensate, I’ve had to sacrifice a quick startup and focus more on starting small and growing as my day job will allow. From my estimates, I will be full time in the next 12-18 months.
Understanding and managing risk is key to running any business. Risk is not to be feared.
Like you my fear is mediocrity and a middle class life. I even wrote about it on my About Page. I way rather be homeless than live that life, or a multi-millionaire. I have already been practically homeless so I guess I have only one way to go.
Capitalist Fool - there is a ton to be said for your situation, however. I’ve got two sites, both finally starting to pick up, and it just takes awhile to pull together the feature set and relationships you need to see some growth.
And having a loving support network as you take those steps and missteps is priceless. I certainly enjoy the flexibility of being single, it too is priceless in its own way. But I think your situation and dependencies provide a lot of value, to put it sort of sterile-ly.
Risk. I find the entrepreneurial endeavor to be as much personal/self-related as it is a professional risk. I definitely fall so much into the “afraid of the middle class life” category I’m not even sure I have much choice about starting a business! Perhaps the greatest risk I could take would be to *not* be launching a company.
Well said. I think some people look at all their obstacles, feel overwhelmed, and never take a first step toward their passion. Instead of just giving up, they should realize that their dream is not impossible; they just need to develop a different strategy to achieve it.
I don’t think there is any real risk in running your own business. It really comes down to your drive and skill as a business person. I think there is risk when you depend on others to run your business, but when managed correctly, that really isn’t much of a risk either. I think risk is staying still and being afraid to become extraordinary. Gambling is a risk. Don’t gamble.
I have had a “5 year plan” for about 7 years now - (have my own business that supports me in 5 years), and have finally started one that could. I have had plenty of ideas but funding has fallen through the last couple times.
The current economic enviroment did not change any of the my risk appetite, it just happened to come along at the same time I was finishing up my business plan.
My risk appetite has been more of a fear of getting involved with the wrong financial partner and not being able to get out of it. Failing or deciding to stop an endeavor when it is only my own money at risk is very different.
I agree with most of what you’re saying, but would you REALLY rather be on food stamps than make a comfortable 6-figures year?
I think they key is proper planning, and then risk management. I’ve had two successful businesses in the past, but am currently back in a full-time position with a company, and can’t wait to get back to running my own show. The goal is to set aside 1.5-2 years of living expenses, and then go back to the drawing board on a new idea. So many of life’s battles are won and lost in the mind, and I want to make sure the thought of covering basic expenses doesn’t even cross my mind. I’m currently working towards that goal, and it gets closer each day.
Thanks for all the great posts on this site. Keep em coming!
+ve results and one is in risky zone because to always have +ve results and growth is the biggerst risk to handle. What if fails ?
With this bad economy is starting your own business really a bigger risk? People who have been working with companies for 20 years are being let go, while at the same time seeing their 401Ks depleted.
I would rather know the risks (and rewards) I’m taking and start a business, than putting it in someone else hands as just an employee.
You don’t have to quit your job or sell your house to start a business. Find something you like and you’re good at, and figure out how to many money doing it. The worst thing that could happen is that you’re still working and making a few dollars on the side. At least you’re not completely broke if you get laid off. And that should just encourage you to try again next time.
I don’t think we were put on this earth to live our lives in an endless mundane cycle. Take risks now to avoid “What Ifs” later.
I think we’re all ultimately fearful of the unknown. Consider the nearly universal fear of public speaking. Are you afraid of speaking? Are you afraid of the public? No, you’re afraid because you don’t know what could happen when you speak in front of a large crowd. You don’to know if someone will walk out on you, you don’t know if you’ll screw up, you don’t know if you’ll give the best speech of your life… if you knew what was going to happen, you wouldn’t be so fearful. You’d just do it and be done with it because you have to.
I’m fearful of regrets, I don’t want to look back in ten years or forty years and wonder “what if.” Time is the only commodity we truly have a limited amount of. Once it passes, it’s gone and you can never get it back again. That’s why I quit my cushy job as a consultant in the defense industry last year to start my own business, no regrets so far!
People are afraid of what others will think of them when they fail, or get something wrong.
“Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure…” –by Mariannne Williamson.
“Fear is simply excitement without breath”.
“I can’t understand why people are afraid of new ideas, I’m afraid of the old ones.” - John Cage
[“I can’t understand why people are afraid of new ideas, I’m afraid of the old ones.” - John Cage ]
Love that quote!
Andy, great stuff.
I agree life is about the thrill of adventure. People talk about emergency funds and safe investments. I prefer to use my brain to minimize risk. By making smart decisions, risk is minimized.
-Nate
Andy - really interesting peek into the mind of those who take risks.
I’m a neuroscientist and I’ve just written a rather long piece on my site about how the brain handles financial decisions. Turns out that entrepreneurs brains are tweaked to engage in greater risk-taking (or at least are less risk-averse).
This isn’t to be confused with being reckless - in the experiment the entrepreneurial group made sensible decisions and judged the odds of success just as well as others, they just put more money into the venture.
But of course Andy, this must be stating the obvious to someone like yourself!
Cheers
Patrick
Risk is only a factor when fear exists. Fear is based upon either the unknown or concern of loss. When you have nothing, you have no fear so you can risk without concern. When you know the outcome, you do not fear as there is no risk.
Therefore…be bold. Be bold because you know that in the worst case….the only thing you can lose is money. Money can be regained but a life unchallenged will always be lost.
Davis Bae
Hmmm I disagree, risk isn’t always just from failure, there’s also opportunity cost involved. By pursuing one project, you can’t pursue another and so the risk isn’t just that you fail to succeed in the first project, but you also fail in the next best project you opted not to do. Fear does play a role but to say risk is only a factor when fear exists is incomplete.
I would agree with what you said, however I think most people don’t look at choosing one opportunity over another as a risk in most situations.
If you had to decide whether to play the lottery or play at the casinos in Vegas, they are both opportunities, and what comes to mind as far as risk, is how much you could lose playing either one.
I think when confronted with making a choice between two opportunities, people weigh which one has the most benefits as opposed to most risk(even though the inverse of less benefits could be more risk).
In these strained times, I think that in order to succeed risk needs to be assessed from the basic standpoint of “What’s in it for me” If you risk in any venture, you have to have an end objective, otherwise, all that is achieved is a waste of time and more often money.
One key on the current venture is to find a team of people who are willing to take a risk with you. We only needed a small team, so we were very generous with equity, and the whole team chose equity over cash. So as everyone works on the project (some on the side, some full time), they have an enormous amount of skin in the game. And once it’s built, they will have a lot of motivation to make the marketing effort succeed.
It will be an interesting experiment.