We live in a very risk averse culture. When given the choice between knowing something is a sure thing, or accepting what is behind door number 2, the average person will accept what they know is certain. Many individuals feel that working for themselves is more secure than working for someone else, however when you’re faced with a lucrative, stable, corporate career that pays well, diverting from the well trodden path is not only daunting but very risky. Is a personal characteristic of entrepreneurs to be more of a risk-taker, or are they simply more focused on their dream?
When looking around, almost all companies were created by either one individual, or a group of individuals. Granted, these companies may have turned into the large conglomerates and corporations that we see traded on Wall Street, but at some point in time, these huge corporations were most likely an idea deep down inside a single person or group of people. Going forth with this idea takes a special kind of person; individuals with the entrepreneurial spirit have a fire inside them that burns just a little differently than the average person.
While it takes creativity, vision, and knowledge of the specific market the entrepreneur is entering, it can be stated that a major difference in the general populous and those who are entrepreneurs is the willingness to accept risk. 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 might look to Wall Street to understand the risk and reward concept. Without taking a big risk, you are unlikely to receive a big reward of large financial gains. Many entrepreneurs also feel the same way with regard to taking the big leap of creating their own business. However, it can be seen that perhaps entrepreneurs are not as carefree and willing to leap as we might think they may be. Many entrepreneurs take baby 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. A relation to this is hedging in the stock market; spreading the risk of one investment by also having multiple less risky investments. You could also think of it as having your full-time job and working on your personal venture on the side until that venture 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 began as an English teacher with a love of fine coffee who felt that the market was ready for such a product in Seattle. He, along with history teacher Zev Siegel, and writer Gordon Bowker, learned the coffee industry from coffee importer and creator of Peet’s Coffee, Alfred Peet. Once learning the business, Baldwin and Siegel kept their day jobs, but worked at the shop in Pikes Place at 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 side while keeping their toe-hold on the sure thing until Starbucks took off. The company later grew to such success, after 40 years and much hard work, that they purchased Peet’s Coffee.
Had the owners of Starbucks focused on their business full-time they most likely could have grown their business much more quickly. Many entrepreneurs may spend their professional “day jobs” dependent on others for their welfare. For instance, let’s say a support coordinator for a corporation is dependent on the sales force meeting their quotas. If the economy faces a downturn, then the support coordinators are the first ones on the chopping block. The perceived security of working in a corporate environment may not always be true. With entrepreneurs who spend all of their focus on their business, they can have control of building the business and creating promotions to spur sales. It is very possible that creating your own business is less risky than working in a corporate environment, but only you can make that decision.
While many may expect entrepreneurs to be daredevils who are willing to throw caution to the wind, these individuals have the spark and vision necessary to go out on their own, but rarely do this without assessing the least risky possible way to do so. Risk mitigation and rationality have propelled entrepreneurs to great success in many of the biggest corporations in the world. Knowing the risk, weighing your options, and looking before you leap are the keys to making the leap more successful.