Running your own business can seem like a carnival ride.
When your career is made up of a series of jobs, your progress is more or less linear. With allowances for the occasional dark-year-of-the-soul, midlife crises or abrupt career shift, you will generally move up in responsibility and income incrementally year in and year out.
There will likely be intermittent plateaus or promotion spikes, but most of the ride will not be particularly shocking. When you own your business, however, life is dramatically less stable.
You can go from broke to flush to broke again in a few quick months. You can soar from bum to hero to bum again in a deliriously fast succession of good decisions followed by bad decisions. And it’s bizarre how much a bad decision seems sound in the moment. Likewise, a questionable choice can deliver fabulous success. The difference, oddly enough, has less to do with luck than with the entrepreneur’s tenacity to keep struggling toward success in face of disaster or immediately after actual calamity.
Some years back in a book on home-based franchises, I included an entrepreneur’s risk tolerance test developed by the Federal Trade Commission. After answering a list questions, prospective entrepreneurs could use a scoring guide to determine how well their personalities are suited to business ownership.
The questions seemed obvious. Questions such as, “Are you optimistic? Or “Do you root for underdogs?” seemed meaningless, as the answers were self evident. Surely everyone would pass this test with a “ok-to-be-an-entrepreneur stamp. Yet when my younger brother took the test he came away saying, “I would fail miserably if I owned my own business.” I suppose it’s a testament to my own inclination to risk that to me all the questions seemed to have only one possible answer.
After of couple of decades owning businesses, I’m no longer convinced that a high tolerance for risk is a good thing. The ups and downs of business ownership can wreak havoc on families. The person you meet on the upswing when everything is dandy may not realize a disturbingly rough downswing is always just around an unanticipated corner. The dot com entrepreneurs who looked like geniuses in 1999, were viewed as crooks by 2001.
Before I launched my first business, I loved poker and horse racing. I relished a day at the races, standing out in the open air at Santa Fe Downs, looking out at the mountains above the scoreboard in a cool afternoon breeze and an obvious pick in the seventh. After you pick up your winnings, you stop for beer and popcorn.
And I cherished my weekly Friday-night poker as well as my Monday evening game. Yet, within a few weeks of starting my own publishing company, I completely lost interest in even these mild forms of gambling. Now that everything was at risk, any desire to play poker or ride to the races completely vanished.
When you’re in business, everything’s at risk. And it’s more than just money and property. Your relationships are at risk. Your trust is at risk. Your reputation is at risk. Your word is at risk. One spectacularly false move could topple all of it. And even if all of your moves are reasoned, market changes can undermine, even destroy two decades of successful prudent effort.
Business people have a reputation for being conservative. When I launched my own business I started to understand why. If you have everything at risk, you’d better make careful decisions. Once you take the mammoth risk of putting yourself on the line, all other impulses should be to minimize risk and exposure. And no matter how careful your moves, the progress of your own company will likely come with soaring highs and gut-wrenching dives. In America, launching a company is the quickest way to wealth. It’s also a life of roller coaster rides.