A young graduate accosted me asked, “I want to venture into business but I am not a risk taker, what should I do?”
I asked her, “who said business is for risk takers?”
There is a general misconception that entrepreneurship is a preserve of risk takers due much publicised high rate of business failure.
On average many reports put businesses that fail within five years at 75 percent. This means only one quarter of all business that are started are likely to succeed beyond five years.
In one of my training programmes, we tried to identify the rate of business failure from people and businesses we know in our locality and we realised the rate of business success is far much higher than universally reported.
The fact that many businesses reportedly fail does not mean yours will fail. There are several reasons why businesses fail and if you know them and address them, then you tremendously increase chances of your own survival.
The narrative of high rate of business failure fails to provide two clear information. First, there is no clear definition of business failure. Secondly what happens to the owners or founders of the failed businesses. Do they start other ventures, get employed or join other surviving businesses?
Most of what is classified as business failures are actually cases of owners changing from one business venture to another.
Normally when you venture into business, a great transformation takes place in your life. This may result in several adjustments and changes.
Once in the market place your mind opens up. You understand yourself better, understand the market, see many opportunities and consequently makes changes that may be erroneously interpreted as failure.
It is evident, for instance very few people earn their living by doing what they studied in college. The fact most people end up doing something different, or unrelated to what they studied does not constitute failure that warrant condemnation of the course, person or education system.
To some the first business is a stepping stone. Just like first degree to some people, it enables you learn basics before taking a definite direction.
You may start a small shop in the village and after some time gain experience, capital and connections to start a supermarket or a totally different business in town. When you close the little shop it may get into statistics as yet another business failure, when in reality it is not.
Entrepreneurs are not risk takers. Most people, on the contrary venture into business to avoid the risk of having someone else determine how much they should earn and up to when. Most employers today are entrepreneurs. This means their risk is the employees’ risk as well. If a business fails it leads to loss of jobs.
The only way to minimise business risk is to start small as you equip yourself with knowledge, skills and experience needed to survive.