Risk-taking is probably the most commonly associated trait of an entrepreneur. While one would be hard put to argue with the importance of risk-taking we find this particular aspect is both misunderstood and overrated. Before we go further, let us understand what risk-taking means. According to Wikipedia: “Risk is the potential of losing something of value, weighed against the potential to gain something of value.” We all have different measures of risk and value, which is natural since this is a subjective issue. After all, every human endeavour carries some risk, from the simple act of crossing the street to investing inequities. Risk-reward can only be measured from the inside, by the person and not the viewer!
Risk-taker is more appropriately levied on a gambler or a thrill-seeker. They are taking a risk because they leave success to chance. Entrepreneurs don’t. Charles Blondin who crossed Niagara Falls many times, in the 1960’s, on a high-rope and Philippe Petit who made the famous unauthorized walk between the World Trade Centres in 1974, would be considered by most as extreme risk-takers. Well, that’s not the case - Blondin started his training at the age of 5 years, was twice married, outlived both his wives and died of diabetes at the age of 73. Petit trained for six years before executing the walk and continues to lecture and host workshops on a variety of topics. So much for being extreme risk-takers!
In the entrepreneurial context we need to examine the risk we are talking about, or what are we afraid of?
The first risk most people talk about is the act of turning into an entrepreneur,
The second is the risk of failure of the new enterprise and the consequences.
Today the first risk seems to have dissipated because of a global trend to create more technology start-up entrepreneurs. They are also starting clothing lines, cafés, restaurants as well as service businesses, which require lower capital and perhaps skills. Sadly, most are ill-prepared for the start-up journey and often lack both a solid Business Frame or the Self-efficacy required for success. One hopes their journey, if it doesn’t end well, will only result in a small financial loss and will be offset by the gain - real-world experience. Companies are actually better placed to take these risks and have a better chance of success have been slow to experiment with new product and services. They just need to get past their false concerns of risk and equip themselves with the 9Entrepreneurisms.