This myth seems to emanate from the media portrayals of entrepreneurs, likening them to old gun slinging, sneering, arrogant cowboys just looking to find and attack risk. My experiences and those of most successful entrepreneurs I’ve met indicate the exact opposite: small business owners with their own money on the line look to minimize, avoid, share, or make risk disappear.
Every time I think of this topic, I’m reminded of Professor Howard Stevenson’s remarks on the subject, essentially saying, “have you ever met an Entrepreneur who wakes up in the morning, bounces out of bed, and says, ‘What a great day! Where can I find risk?’”
I think risk, like beauty, is in the eye of the beholder. By that I mean that risk looks and is different when viewed by an outsider and an insider. An insider is one with good general business experience, and specific industry expertise. This person does not perceive certain risks because he/she knows their way around the risk minefields that the outsider cannot see. Successful business people do their homework to understand given situations. The more knowledge they bring to bear on a situation, the less risky it is. It’s a little bit like throwing more wood on the camp fire: more and more space around the periphery gets illuminated, and it becomes clear that –at least as far as you can see—there really aren’t any wild animals out there. I like Gourmet Coffee marketer Dennis Boyer’s take on this subject. He says, “I think entrepreneurs have a talent for capitalizing on opportunities that have a lot of perceived risk, but because his math is a little more insightful, those risks aren’t quite the same as those for those who see the situation from the outside.”
That is not to say that there are no business risks out there. Of course there are, but the smart businessperson seeks to identify and understand the risks inherent in a given situation. If the risks are too big and can’t be managed, and the risk/reward ratio is out of line, the good entrepreneur will most often walk away.
I also think many business owners do not delineate between Risk to the Business and Risk to One’s Ego. Risks to the business and the assets behind it are real and should be scrutinized with concern. By Risks to your Ego, I mean fear of being rejected by a potential buyer, loan officer, licensor, or whatever. Those should not be confused with Risk to the Business.
A rejection is not a failure. It should be viewed as an opportunity to learn. Successful entrepreneurs have the self-confidence to face all these ego risks and to put their energies into reducing or avoiding risks to the business.
Answer to Challenge #6: GEORGE BUSH—He bugs Gore.