Are You Prepared for the Personal Risks of Entrepreneurship?
The following is adapted from Create and Orchestrate.
Entrepreneurship can be your path to financial freedom and fulfilling work, yet this path comes with many risks. Roughly half of new businesses fail during the first five years of operation.
The reality is that entrepreneurship is challenging, and if you’re not prepared for the risks you will face, you will join the graveyard of failed entrepreneurs.
When starting a business, most people focus on the business risks. They think about competitors and insurance and profit margins. They prepare for all the professional risks, but then when they’re faced with personal loss, they are blindsided and falter in their path to success.
As an entrepreneur, your work and your personal life will be intertwined. Following this path means taking on not just business risk, but personal risk, and to be successful, you must be prepared for both. Let’s take a look at three personal risks you’re likely to face, so that you can be ready to face and overcome these challenges.
#1: Financial Instability
Many pursue entrepreneurship to better their financial situation. Entrepreneurship can indeed lead to great wealth, but you will face financial uncertainty before that happens.
Becoming an entrepreneur generally means a career change. It means moving away from your current income base and saying goodbye to a stable paycheck. This loss of personal financial stability can derail your entrepreneurship journey.
Many people become paralyzed by fear when faced with financial uncertainty and the inability to pay their bills. They can’t handle the lack of stability and lose focus. Often, they give up on their entrepreneurial dreams entirely.
On the other end of the spectrum, some people underestimate the risk of financial loss. They are so impatient to succeed and chart their path to their new profession, that they rush forward, commit too many resources, and make unwise decisions. They end up going broke, delaying their progress toward their dreams.
Work to minimize financial risk where you can, but also be prepared for financial instability.
#2: Loss of Relationships
It is often said in circles of self-help that we are the sum of the people we spend the most time with. We learn by observing others, and that includes interactions and observations of the people we’re close to.
To become an entrepreneur, you must adopt some new behaviors and shed some old ones. When you change how you act, some people will celebrate those changes and may join you in changing some of their own behaviors. Others may not respond so well.
Due to these drastic changes in your life, some of your relationships may not survive. You have to be prepared to say goodbye to relationships that are no longer serving you. It is painful but necessary.
If you’re not careful, you could also lose valuable relationships. Entrepreneurship requires a huge commitment of time, which can put a strain on relationships. You need a strong support network to succeed as an entrepreneur, and you can’t afford to neglect the relationships that lift you up. To protect these relationships, work on increased communication on your part to keep things intact.
Be ready to lose some relationships, but also be ready to fight for the relationships worth keeping.
#3: Loss of Who You Are
When you change things about yourself like earning capacity, technical acumen, and social status, you are also likely to experience a change in other aspects of your life. If you’re not prepared, you could lose sight of who you are.
As an entrepreneur, you can get tunnel vision. You can begin to unconsciously sacrifice your character, your integrity, and your personality in pursuit of success.
To avoid losing who you are, it is important to remain honest with yourself. Trusted friends, mentors, and significant others can be a good barometer for how well you are maintaining your moral compass as you reinvent yourself as an entrepreneur.
You are always a work in progress. Just as you are developing new skills to enhance your career, you can also enhance your character. Instead of losing sight of who you are, entrepreneurship can be your opportunity to refine and improve yourself. Improving yourself will lead to you becoming a better leader, which will ultimately lead to greater success.
Believe in Yourself
It’s important to be aware of these personal risks of entrepreneurship, but don’t let them turn you off from entrepreneurship. This path is challenging, but the rewards are well worth it.
To prevent yourself from being overwhelmed by fear of loss, develop belief in yourself. The most powerful action you can take in the world to manifest something is to believe in it.
Belief in yourself is a necessary ingredient to becoming who you want to be. It doesn’t make obstacles to your success go away. Rather, it fuels your resilience and commitment to overcome the challenges you will face.
So be prepared for the risks and losses you will face, and believe that you are strong enough to overcome them. Believing that you will succeed is the first step to entrepreneurship!
For more advice on managing the risks of entrepreneurship, you can find Create and Orchestrate on Amazon.
Marcus Whitney is CEO and founder of Health:Further, a strategic advisory firm working with leading healthcare organizations, as well as founding partner of Jumpstart Health Investors, the most active venture capital firm in America focused on innovative healthcare companies. He is an in-demand speaker who hosts a podcast called Marcus Whitney’s Audio Universe, and sends out a weekly newsletter called Two Worlds. Marcus has been listed in the Upstart 100 by Upstart Business Journal, Power 100 by Nashville Business Journal, and has been featured in Inc., Fast Company, and The Atlantic. To connect with Marcus or receive his weekly newsletter, visit MarcusWhitney.com.