Running a business is the surest way to create wealth–for yourself and for society. But starting a business is not for everyone. How do you know whether it’s right for you? People start businesses for a variety of reasons most of which are driven by internal desires:
- To be independent
- To satisfy a your own need for a specific product or service
- To make more money
On the other hand the reasons that keep people from starting a business are often driven by fears of the effects of external conditions:
- Fear of competition
- Fear of the impact of political changes (taxes, regulations)
- Fear that the economy is bad or will change for the worse
But perhaps the biggest indicator of whether or not you should start a business is your tolerance of the perceived risks relative to the status quo. For example, if you have a job, the risk of quitting and starting a business may seem greater than keeping the job. If you don’t have a job the risk of starting a business may seem greater than finding a new job. If you have money in the bank the risk of investing it in your own startup may seem greater than investing it in the stock market. And so on.
Still, perceptions of relative risk are often wrong. Your position in your current job is never totally secure. Or it might take longer to find a new job than it would to spin up your own company. And it is highly unlikely that the goals of that public company you’re considering as an investment would align with your own goals.
So here is the bottom line question you must ask yourself: Given the fact that any adverse external conditions will create risks for all businesses, how can you best manage the effects those risks will have on you?
- By depending on an employer or the managers of a company you invest in? Or…
- By relying on your own abilities?
So you see, some people who start businesses are not risk takers. On the contrary, they’re risk managers and they view being their own boss as less risky than the alternatives for their career.
Argent Place Advisors. Personal Legal and Business Counsel to Entrepreneurs and CEOs.