Starting your own business has long been considered a risky proposition. Just the potential for failure and loss discourages many would-be entrepreneurs from giving it a go. Intimidated by oft-reported statistics like “50% of all businesses fail within the first two years,” even those with great ideas or lots of skill frequently decide to play it “safe.”
This is a shame. And it comes at a cost for the rest of us. How many great ideas are trapped, never to be brought to market, because of the fear of risk?
What’s more—how much of that risk is actually substantiated? Sure, trying anything new comes with some chance of failure. But often the likelihood and potential downsides of that chance get over-inflated, while the security of other options gets over-estimated.
So if you’re thinking about trying your hand at entrepreneurship, here’s how to keep the “risks” in perspective.
Job Security Doesn't Exist
These days, there is no such thing as job security. It used to be that you could play it safe by committing to a well-trodden and clearly defined corporate career path. People often spent their entire careers working for just one firm.
But that’s no longer the case. Industries are evolving so quickly that jobs appear, change, or disappear practically overnight. Companies don’t expect life-long allegiance from their employees—and some even actively try to cycle employees out of the business after only a few years.
All of this is true even in a good economy—so if you account for the economic downturn of these last few years, the stability of traditional employment weakens even further. So much so, actually, that scores of former employees have decided to become their own bosses to make their jobs more secure.
You Don’t Have to Bet the Farm
The risk for any experiment or new venture can never be mitigated completely, but it’s up to you to decide just how much to chance. You can put yourself in a risky position by keeping your genius idea to yourself, double-mortgaging the house (or racking up credit card debt), and launching the biggest version of your dream possible. Or you can play it safer by soliciting lots of feedback in advance of launching and finding small inexpensive ways to test your idea in the market. Neither path guarantees success, but the latter certainly insulates you from total devastation in the case of failure.
Failing Isn’t that Bad
Fear of losing tangible assets or undermining your family’s financial security is one thing, but failure in itself isn’t worth being scared of. I don’t know whether it’s our culture, educational system, or baseline human psyche, but for some reason many people believe they won’t be able to recover from being wrong. I frequently talk with entrepreneurs who sweat this, worrying, “what if I’m wrong?” And I respond: Then you’re wrong. So what? You can figure out how to make it right or take the lessons learned and move on.
No one is 100% right from the get-go. That’s why testing and feedback are so valuable. So, ask yourself: if you weren’t scared of failing, what would you try?
But You Don’t Want to Live with Regret
Of all the business-related angst I’ve witnessed, nothing seems more haunting than the experience of regret. That mournful curiosity about “what could have been”—if only you had done something differently and given your business venture a shot. It’s a feeling much worse than failure.
That doesn’t meant that you need to pursue every idea you have, but you owe it to your future self to at least explore the possibility seriously. You won’t regret things that you decide not to do for a good reason, only the things you decide not to do for bad ones.
The truth is, the risks associated with entrepreneurship are all relative. And while you can certainly find ways to increase and decrease what you stand to lose, it’s not fair to write off the possibility of starting your own business just because it’s too “risky.”
It may be just as risky not to.
Photo courtesy of Joi Ito.