The Relationship Between Risk and Entrepreneurship

A few weeks ago my husband and I had dinner with another couple and the conversation turned to risk tolerance.

Our friends said they're solidly in the risk-averse category and my husband and I agreed that we are too - we're savers, we're not incredibly spontaneous and we love a good plan. 

It took our friend a minute, but it was clear that our answer wasn't fully computing. He looked at me and said "but clearly you're a risk-taker because you started your own business".

This was a really interesting point and I had to think about it for a minute.

The first answer that popped into my head was "it didn't feel like a risk".

As I thought about it more, it really didn't feel like I was taking a risk. I had run the business on the side for a year or so and I had become so unsatisfied with my 9-5 job that there was no way that I could stay, it wasn't even an option. So after having tested it out for a year, enjoying the experience and seeing that I was providing value, the next logical step for me was to move it into a full-time business.

Fast forward to now, I'm reading Originals: How Non-Conformists Move the World and I read the following quotes about the relationship between risk and entrepreneurship:

  • “We find that entrepreneurs are significantly more risk-averse than the general population”
     
  • "Entrepreneurs who kept their day jobs had 33 percent lower odds of failure than those who quit. If you’re risk averse and have some doubts about the feasibility of your ideas, it’s likely that your business will be built to last. If you’re a freewheeling gambler, your startup is far more fragile."
     
  • "By covering our bases financially, we escape the pressure to publish half-baked books, sell shoddy art, or launch untested businesses."

This was fascinating to me as I've never concretely thought about the potential upsides of being risk-averse in the context of starting a business.

I read on and found this quote from one of the founders of Warby Parker and was amazed that it was so similar to my own response to my friend's question:

“By the time we were ready to launch, and I had to make the decision this was something we were ready to do full time, it didn’t seem risky. It didn’t feel like I was taking a big leap of faith.”

I share this with you because I don't think this is a message we hear about entrepreneurship and starting a business.

I don't want anyone to be held back by the idea that they're risk-averse and therefore can't be an entrepreneur.

I don't want anyone to feel the pressure of needing to quit their job and do their passion instead of testing out their idea as a side-business.

Bottom line, if you have dreams of starting your own thing and are risk-averse, you're in luck. You may just be able to leverage it to help you build a fantastic business that lasts.