Support Smart Step, Inc in the 2009 StartupNation Home-Based Business Competition

Support Smart Step, Inc in the 2009 StartupNation Home-Based Business Competition

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I would love to have your vote in this wonderful contest for work at home companies!

Is there Really Risk in Self Employment?

Is there an element of risk in self employment?  Yes!  Do you have to be risk tolerant to be self employed?  NO!  I know this goes against the grain, but risk tolerance is so specific to the person and circumstances that it cannot be labeled as a must have for self employment.  You cannot answer the question “can you handle risk” and know if you will be good at self employment.  I am going to take three areas that are typically considered risky and look at how these might not be risky.   

 Income is the most common risk that I hear people talking about.  The risk from this is usually associated with lack of a regular income.  It is risky to not have a regular flow of money coming into your bank account.  I would agree to this but let us look at how it might not be a problem.  Do you have a spouse that earns money and you can live on their income only?  Can you start your business as a part time gig until it takes off and then quit your day job?  Can you save enough money to live for a year without needing additional funds?  Did you get an inheritance that you can use to live on?  These and many more can make income not risky.

I also challenge you to view income risk from your current position.  Are you on commission?  Is your company stable?  Is your department or even specific job stable?  Our daily work lives are much more unstable than we allow ourselves to think about.  At least with owning your own business you control the income risk by how much you work on getting your business up and running!  Plus you always know what is going on and can plan accordingly! 

Start-up costs are another risky area for a new business.   Signing personal loans, running up credit card debt and mortgaging your house are all highly risky ways to start a business.  When I hear an entrepreneur say they have put everything they have into their business warning bells go off!  This is not only risky but stupid.  I challenge you to play with the idea of no loans; use your own money for start up costs and only use what you can afford to lose.  Then you control your risk and will not be stuck with the loan payments after the business has closed.  An added bonus of eliminating this risk is that you will make your decisions slower because it is your cash, which typically leads to better decisions!

Risk number three is that the startup might fail.  This would leave you in the position of having nothing left and you would need to look for a job.  Yes, but your current job could be eliminated and you would need to look for a new one then also.  Having nothing is also relative.  Were you smart and did you not jump all in with everything you have (see start-up costs above)?  You should still have your family if you lead your business with balance, and you still have yourself.  I believe the biggest issue here is actually that if the new business fails then your ego takes a beating! 

To me this last risk which is really more of an emotional one is the true risk in business.  The emotional rollercoaster that you put yourself on becomes the hardest part to survive because it is the hardest part to plan for, and is a whole different article!

Don’t get me wrong, risks are everywhere, life itself is risky.  But risk is all relative to the choices you make and how you plan to manage for those risks.  Risk by definition is the chance of suffering harm or loss and uncertainty.  Therefore the best way to reduce risk is to plan different ways to eliminate the possibility of loss or harm occurring.  Don’t make risk a reason to not start a business; because once you consider all the realities and plan accordingly the risk in business is small and controllable.  Don’t let risk make you not consider self employment!