True Story About Risk vs. Perceived Risk in Entrepreneurship

In retrospect I think it’s a lot like driving: no matter how well the other person drives, I always feel safer it I’m behind the wheel.

Thinking about risk and entrepreneurship: There is risk, perceived risk, and the difference between real risk and perceived. And I know that I always feel less risk if I’ve got my hands on the wheel. Do you?

This helped me a lot while I was in the high-risk high-growth stage of growing a company, with my wife and I signing second and third mortgages and liens on our house.

I wasn’t really in control of the risk because I wasn’t in control of the market, market trends, competitors, competitive trends, etc. There was always the chance that a distributor could fail to pay, putting us into a world of hurt. There was always the chance that a big company would squash us, maybe not even on purpose.

So I wasn’t in control of risk, but I perceived less risk because I was in control of the business. I made the decisions.

6 thoughts on “True Story About Risk vs. Perceived Risk in Entrepreneurship

  1. Unfortunately, in my first business, I too perceived less risk because I held the steering wheel, but it was to my bsns demise, as the risks were really out there and they snuck up on me unawares and bit me. To this day, I feel a fool as I lost all with no hope of recovery in that bsns. However, I would also caution entrepreneurs that many risks are only perceived and it is this false perception that should not be allowed to flourish.

  2. Interesting post, Tim. I can relate. When I launched my business 11 yrs ago I was yearning for strategic control over my career. Any concerns I had about risk were outweighed by my desire to get my “hands on the wheel.” Of course, it helps that starting a practice in my field (executive search / headhunting) has low start-up costs.

  3. Tim,

    You come across as a conservative risk-taker.

    2nd and 3rd mortgages?

    WOW>

    The entire small business community is glad you took the risk. The software you developed for us…rocks!

    The Franchise King®

  4. Tim….I found early in the business life cycle there is very little perceived risk. Being a little naive is actually an asset. If you understood all the risks, and how hard it would be, you never would have started the business in the first place!
    Later in the business life cycle, the risk becomes greater as more competitors enter your space and drive down prices.

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