Sunday, February 21, 2010

Getting to do what you love - a risk worth taking.

Entrepreneurship is a game plagued with a lot of myths.

Those assumptions can often lead new entrepreneurs and untested small business people over a cliff and into failure.

Malcom Gladwell had a good article in the Jan. 18, 2010 New Yorker called "The Sure Thing. How entrepreneurs really succeed."

This is a good article that upends many assumptions about entrepreneurship . It's largely an analysis of the commercial behavior of high-roller entrepreneurs but there is much good for startups and new entrepreneurs to glean.

A standout among those assumptions is that successful entrepreneurs are risk-takers. Malcolm Gladwell's piece posits that most successful entrepreneurs are risk-avoiders.

Quoting from the economist Scott Shane's book, The Illusions of Entrepreneurship, "Yes, he says, many entrepreneurs take plenty of risks - but those are generally the failed entrepreneurs, not the success stories. The failures violate all kinds of established principles of new-business formation."

These would include how much money you have available to start, organizing as a corporation, business planning, types of startups and the always-popular, "Ninety percent of the fastest-growing companies in the country sell to other businesses; failed entrepreneurs usually try selling to consumers, and rather than serving customers that other businesses have missed, they chase the same people as their competitors do."

These are key areas to focus on when starting an enterprise of any kind. I think there are many ways in this economy for starting sustainable new ventures. You just need to align expectations with reality. That said, there has never been a better time to try your own business.

Here is perhaps the most telling 'vote-with-their-feet' story to emerge from Malcom Gladwell's article on entrepreneurs: "This is consistent with the one undisputed finding in all the research on entrepreneurship: people who work for themselves are far happier than the rest of us. Shane says that the average person would have to earn two and a half times as much to be happy working for someone else as he would be working for himself. "

Shane goes on to describe an experiment in which entrepreneurs and non-entrepreneurs were asked to choose among outcomes that would net them $5 million with a 25% chance of success or one that would net them $2 million with a 55% chance of success or a profit of $1.25 million with an eighty-per-cent chance of success. The entrepreneurs overwhelmingly chose the last, safest option.

"They were drawn to the eighty-per-cent chance of getting to do what they love doing."

Your enterprise needs to continuously create value and profit to be sustainable. If you do what you love, you can't help but create value. To put that love into action requires that you build your professional practice appropriately, which means planning that minimizes stupid risk so you get to keep doing what you love.

Sounds like a risk worth taking.

Malcolm Gladwell article abstract in the New Yorker. Subscription required for full article.

Photo is of a Cocoa bean, the basis of chocolate.

No comments: