Most Entrepreneurs Are Accidentally Risky

Most Entrepreneurs Are Accidentally Risky

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Every entrepreneur I’ve met views risk completely different than anyone else. People may think they take huge risks with their money, but in fact, they are quite frugal. The good entrepreneurs scrutinize every penny. With them, the old adage rings true, it’s not the money you spend, it’s the money you save.

The motivation to minimize risk is in every entrepreneur. Their focus is to spend money on what will give them the most return on their investment. Where as, an employed person knows if they are short one month, all they have to do is hang in there until their next check arrives. As an entrepreneur, you may not know when or if that next check is going to come at all. See, their aversion to risk is so high, their sense of investment is much more developed. They know a good opportunity when they see one.

It has more to do with logic, than risk

When you are employed, most likely your income comes from one source. Entrepreneurs view a single source of income as extremely risky. If anything should happen to that one income stream, well, you better have a lot of money saved! An entrepreneur views every opportunity as a source of income. This significantly modifies your world view to include infinite possibilities. Have a customer or client decide not to work with you anymore? No problem, there are several others waiting in line who are ready to go. This fan-out approach is inherently a lot less risky.

This logic extends to not only getting business, but how they manage it as well. For example, in Ecommerce, you make money in only two ways, by volume or by margin. The fan-out approach works well here again, in the sense that having more product to sell, will get the attention of more buyers, thus selling more product. More product to sell, is less risky than selling just a few products limiting your market. However, having a niche market, with a high margin can also be less risky. Less product to support, inventory and promote, means less overhead. As long as the market is there, your risk can be mitigated.

Idleness is the most risky of all

One trait that is consistent with several entrepreneurs is their insatiable appetite to keep trying something new. Whether it’s introducing a new product or service or just updating an existing one, there is this never-ending urge to tweak and refine. There is no question that entrepreneurs are more productive than the average employee. They are high performers. Their motivation is a race against the clock to inch one step closer to perfection. If you made X amount this month, an entrepreneur might ask, well how much more effort would it take to to increase revenue the next month? What if I simplified it, streamlined the process and got rid of unnecessary barriers? Doing nothing is accepting that everything is okay the way it is. This goes against the very reasoning an entrepreneur went out on their own in the first place. Their whole existence was initiated to fix a problem. To right a wrong. Sitting idle, might as well be, giving up.

Entrepreneurs consistently break the rules, because they never knew the rules in the first place. Even if they were aware of them, they truly believe those rules to be suggestions. You’ll see this time and time again, by explaining to an entrepreneur, “you can’t do that because…” and every time that happens, you’ll see this look of confusion on their face. They truly were not aware. It’s a fascinating thing to watch and extremely frustrating for the entrepreneur. In fact the opposite happens when you tell an entrepreneur, “you can’t.” They’re now even more emboldened to find a way around it. For many people risk is this thing. It’s a series of mazes that has to be navigated through, taking possible months and years, but has to be done. If not done correctly, there can be repercussions. For entrepreneurs, risk doesn’t even have the same definition as the rest of us. It’s simply an idea that gets in the way.

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