The image of the entrepreneur as a risk taker is pervasive.

It’s also a myth.

Sure by starting a business and becoming an entrepreneur you are taking on a risk, in particular you’re taking on the risk that you’ll have no pay cheque at the end of the month. Though if you’ve ever been made redundant, had your employer go bust or been fired you’ll know that the same risk applies to those with a “secure” job. As an entrepreneur you can minimise this risk by ensuring you aren’t dependent on one customer for your income. As an employee you have no way to minimise the risk other than to become a part-time entrepreneur!

In both cases there’s the risk that you can’t find another job should things go wrong. The experience of starting your own business rarely damages your job prospects. Thus both the employee and the entrepreneur face the same level of risk.

As for financial risks, entrepreneurs tend to start with the same level of assets as employees and they’re just as likely to have a mortgage etc. As a result they’re unlikely to be facing any greater financial risk than an employee.

So what is the difference, in terms of risk, between an employee and an entrepreneur? It’s that entrepreneurs are in control of their future, they have the ability to influence the outcome, whereas an employee is at the mercy of their employer. Furthermore, most of the risk of a new business venture is born by the investors, employees, suppliers, customer and creditors.

In short being an employee is riskier than many people believe. Being an entrepreneur is much less risky than those same people believe. There is a proviso however; there are entrepreneurs (I prefer to think of them as gamblers) that do take risks, often massive risks, and like most gamblers, they usually lose (fail). In contrast rather than being risk-takers, most successful entrepreneurs are risk-minimisers.

So if you’d like to be an entrepreneur, but the ‘risk’ puts you off here’s some advice:

• Start part-time. Don’t give up the day job until you have some steady income from the business.
• Test your business idea before you commit 100% to it. Read How To Start A New Business for more on that.
• Work hard to ensure that no single customer accounts for more than 30% of your revenue.

In other words minimise your risk!

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