Entrepreneurs: risk takers or risk mitigators?

We live in a very risk-averse culture. When given a choice between knowing something is safe or accepting what’s behind door number 2, the average person will accept what they know to be safe. Many people feel that working for themselves is safer than working for someone else; However, when faced with a lucrative, stable, and well-paying business career, deviating from the beaten path is not only overwhelming but highly risky. Is it a personal characteristic of entrepreneurs to be more risky, or are they simply more focused on their dream?

When you look around, almost all companies were created by an individual or a group of individuals. Of course, these companies may have become the large conglomerates and corporations that we see trading on Wall Street, but at some point, these large corporations were probably the idea at heart of a single person or group of people. To follow through with this idea you need a special kind of person; People with an entrepreneurial spirit have a fire inside them that burns a little differently than the average person.

Although creativity, vision and knowledge of the specific market that the entrepreneur is entering is needed, it can be said that an important difference between the general population and entrepreneurs is the willingness to accept risks. It is often said that 50% of business ventures fail in the first 2 years. That figure is something not to be taken lightly by the squeamish venture capitalist.

You can search Wall Street to understand the concept of risk and reward. Without taking great risk, it is unlikely that you will receive a great reward of great financial gains. Many entrepreneurs also feel the same way about taking the leap of starting their own business. However, it can be seen that perhaps entrepreneurs are not as carefree and willing to take the leap as we might think. Many entrepreneurs take small steps when creating their business. They are often rational thinkers who have this creativity and vision, but rational thinkers also tend to try to minimize risk. One relationship to this is hedging in the stock market; spreading the risk of an investment by also having several less risky investments. You can also think of it as having your full-time job and working at your personal company until that company is sustainable enough to allow you to quit your “day job.”

An example of such entrepreneurs is Jerry Baldwin, one of the founding owners of Starbucks coffee. He started out as an English teacher with a love for fine coffee and felt the market was ready for such a product in Seattle. He, along with history professor Zev Siegel and writer Gordon Bowker, learned the coffee industry from coffee importer and Peet’s Coffee creator Alfred Peet. Once they learned the business, Baldwin and Siegel kept their day jobs, but worked at the store in Pikes Place during lunch or after work. The only paid employee was Gordon Bowker, and the team minimized their risk by having multiple entrepreneurs willing to work on the sidelines while they played it safe until Starbucks took off. Later, the company achieved such success, after 40 years and a lot of work, that they bought Peet’s Coffee.

If the Starbucks owners had focused on their business full time, chances are they would have been able to grow their business much more quickly. Many entrepreneurs can spend their professional “day jobs” depending on others for their well-being. For example, let’s say a support coordinator for a corporation depends on the sales force meeting its quotas. If the economy faces a recession, then the support coordinators are the first on the chopping block. The perceived safety of working in a business environment may not always be true. With entrepreneurs who dedicate their entire focus to their business, they can be in control of building the business and creating promotions to drive sales. Creating your own business may well be less risky than working in a corporate environment, but only you can make that decision.

While many may expect entrepreneurs to be reckless who are willing to let go of caution, these folks have the spark and vision to go out on their own, but they rarely do so without evaluating the least risky way to go. Risk mitigation and rationality have propelled entrepreneurs to great success in many of the world’s largest corporations. Knowing the risk, weighing your options, and looking before you jump are the keys to making the jump more successful.

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