open.jpg (172395 bytes)Risk

They’re risk takers, impulsive, optimistic or calculated; whatever type they are they all boil down to risk takers-entrepreneurs. Sunday we toured the home of two entrepreneurs-in trouble. They had built the home of their dreams and then the housing market tanked. They are home builders and now they’re trying to sell it. I felt horrible because as they showed us around their home, it was clear that they did not want to give it up.

store.jpg (2552748 bytes)This is the harsh reality of being self employed. When things are going great people condemn you for paying yourself “so much.” When it tanks, it’s you alone maxing out the credit card, slow paying your vendors, and talking to the bankers. Not many people understand the tightrope entrepreneurs walk: huge sacrifices, big risks, gambles, and incredible “lifestyles of the rich and famous” payoffs or maybe not. Many times it’s just a big roller coaster of feast and famine.

I know, because I’ve been there. Have you ever had to explain to a banker why you posted a loss and why they should continue to advance you a line of credit? I have.  So when this lovely couple ended up being at home when we came to tour their house for a second time, I couldn’t help but feel incredibly connected. You see, it could be me; I could be the one not able to make ends meet. I could be the one who developed a lawn care business only to lose it when growth regulators made lawn mowing obsolete. I have to smile because I know the average person thinks that it comes  easily, but it doesn’t and the risk it huge.  I remember in a high school accounting class the teacher saying that after 5 years only 20% of the businesses started will still be functioning. So 80% will fail in the first 5 years, and yet I’ve seen people consider Maurice and me and think it just happened, we just cut a little grass and somehow ended up with a company grossing over 2 million. They ask silly things like “do you have a truck?” and make comments like “You must like working outside?” They’re totally clueless.

risk.jpg (437199 bytes)Here we are in an age of company bailouts which I find incredibly interesting. For the average entrepreneur there are no bailouts, no safety nets. You make a mistake you pay for it, fiscally, but nobody fires you, then again nobody helps you fix it either.  It goes with the territory, no safety net, no cap on income.  The reality is that there are no guarantees, not in business and not in life. The solution is to do your homework, be prepared and then make a decision. Life is risk.

“The first step in the risk management process is to acknowledge the reality of risk. Denial is a common tactic that substitutes deliberate ignorance for thoughtful planning.” – Charles Tremper