One of the most common myths about starting a business is that it’s such a risky endeavor. And while there is indeed some risk involved, the real risk, especially when the economy is struggling, is in not starting your own business.
Unless you’re a trust-fund baby, most people are faced with two work choices in life. You can work for someone or you can work for yourself. In the past year alone, more than 2 million Americans have been laid off, many, if not most, the victims of someone else’s mistakes. As an employee you are always vulnerable or at risk of losing your job, and there’s little you can do to control that. Jim Collins, business guru and author of the bestselling books Good to Great and Built to Last, tells students in his business classes that to take a corporate job means you’re putting “all your eggs in one basket that is held by someone else.” Now that sounds pretty risky.
Business ownership puts you in control. Obviously, even as an entrepreneur, you are subject to the state of the economy, the whims of the market, and the actions of a whole cadre of people, be they employees, suppliers, vendors, or customers. But as the owner of the business you are at the hub of all the decision making, not merely a spoke in the wheel.
That’s not to say there’s no risk in startup; of course there is. But if you do your homework (map out your goals, write a business plan, etc.), the risk is mitigated. So your first task is to figure out what you’re risking and then it’s your responsibility to manage those risks.
How much money you risk when starting a business is up to you. Ask yourself how much money you can afford to lose. And don’t put any more than that into your startup. Approaching this with the understanding of the worst-case scenario will spare you some unfortunate surprises. The key is to start on as much of a shoestring as you can and don’t put up more than you can afford to lose. That threshold is yours to set. Risking your house to start a business might not be the best choice, unless you’re prepared to possibly lose your home. But many entrepreneurs do put their houses up as collateral and are happily (and luckily) still in business.
Can you risk the time? While it’s true you can’t ever make up for lost time, what are you really risking? Spending time to build a business, to take control of your life, doesn’t sound very risky. You may be working crazy hours though. So there’s the risk of alienating your family and friends when you’re too tired to go out. But again, this is in your control. Chances are you can work flexible hours, at least part of the time; after all there’s no boss checking to see if you’re at your desk eight hours a day. So make sure you communicate with your family and friends and tell them what you’re doing and why.
Now it’s time to compare. Risk of starting a business: mostly money and time. Risk of not starting a business: someone else is controlling your time and how much money you make. In fact, you could be in daily jeopardy of losing your job because of the mistakes of others.
As the owner of your own business, you are in charge of your life. You are responsible for the wins, and losses, in your business. You have to rely on yourself to make a living. It’s your responsibility to make it happen.
Rieva Lesonsky is CEO of GrowBiz Media, a content and consulting company that helps entrepreneurs start and grow their businesses.