How to Prepare for the Risks of Entrepreneurship
Whether you’re just starting an entrepreneurial journey or you’re a seasoned, established entrepreneur, you’ve likely heard and read stories warning you of the downsides of entrepreneurship — namely, the risks.
And there are undoubtedly plenty. The risk of walking away from security and an established career path to create something new. The risk of taking yourself and your family into an unfamiliar storm of stress and uncertainty. The risk that you’ve miscalculated an opportunity, or your own internal resources, as you plunge into a new venture.
To seriously consider taking the entrepreneurial leap already sets a person apart from the vast majority of men and women who will never come close to actually leaving the world of wages.
But even for the uncommon, the reality of risk that comes with that leap — when the last paycheck is left behind and life is reduced to a single do-or-die mission — hits like ice water.
It is the most naked moment in a working life. It can be a powerful energizer. It can also be overwhelming if you are not, at some level, prepared.
RIDE THE ENTREPRENEURIAL ROLLERCOASTER
Tom Ashbrook, founder of HomePortfolio, Inc., knows firsthand the risks of entrepreneurship. He left The Boston Globe to launch HomePortfolio.com with a college friend. The web service helps consumers make choices about home design and helps manufacturers and retailers market to focused buyers.
“On plastic and prayer, we built the first deep online database of home design products: windows, doors, lighting, flooring, cabinetry, appliances, furniture,” Ashbrook said. “After almost losing our shirts getting started, we raised $72 million and made the site the national leader in its sector.”
Yet, Ashbrook added that the “story of the company we founded is still unfolding,” and it hasn’t always been an easy road.
“Here’s what it finally came down to in my case: about forty bucks left in the bank, a home leaning alarmingly toward repossession, enough credit card debt to keep a wage-earner underwater for years, and a marriage hanging by a frazzled thread,” he said.
Although there is a new management now in place, Tom was able to take the organization to great success.
Not all entrepreneurial journeys have such significant highs and lows. Yet there will most likely be obstacles, challenges and, of course, risks.
Just as you identify, consider and plan for risks in your business plan, it’s equally important to consider possible risks to your personal and professional life and do what you can to plan accordingly.
3 WAYS TO PREPARE YOURSELF FOR THE RISKS OF ENTREPRENEURSHIP
Based on his experience, Ashbrook offers three ways to prepare to “face the storm of risk that accompanies launching a new venture.”
ASSESS YOUR TOLERANCE FOR RISK BEFORE YOU DIVE IN.
Serious entrepreneurship is not blind adventuring. But even when you’ve done everything you can to minimize risk, it will still show up, alarmingly, at some point in your effort. Imagine how you are likely to respond. You may misjudge, but a tough exercise in self-awareness is good preparation.
BRACE YOUR HOME LIFE.
The pressures of a new venture are nearly impossible to compartmentalize. Despite your best efforts, they are almost certain to roll into your home, your family and your love life. Loved ones deserve a big heads-up and your acknowledgement that to no small degree they are being drafted into your dream. Their support will be critical. Their alienation could cost you more than a new business.
DON’T TAKE THE ENTREPRENEURIAL LEAP SIMPLY FOR MONEY.
Of course, you want to be successful. But follow a real passion in your venture, whatever it may be. That passion will carry you through the days when risks and obstacles seem insurmountable. When the chips are down, your passion can be a great stabilizer, a powerful antidote to the inevitable emotional challenges of risk.
AND A BONUS TIP?
“Finally, I tell my friends, only half-jokingly, try skydiving first,” Ashbrook says. “If it’s just adventure you want, that might get it out of your system. And it always comes with a parachute.”