Myths About Entrepreneurial Risk and Growth

Several interesting articles this week on entrepreneurial risk and and small business growth.  Over at Business Week, John Tozzi covers the recent New Yorker article Sure Thing (subscription required to read the full article) by Malcolm Gladwell.  It says entrepreneurs are not wild risk-takers.

As John points out, anyone who has been an entrepreneur or small business owner - or has talked to them about business will not find Gladwell's article surprising. 

I'm curious about where the myth of entrepreneurs being unbridled risk takers comes from.  I can't think of a single successful entrepreneur that fits this description. 

This week's other interesting myth article comes from the New York Times.  Why Would a  Business Say No to Growth covers a pizza shop in Chicago that is choosing not to grow.  The article's closing sentences are "Is there something wrong with that? If not, why don’t more people make the same choice?"

Actually, the majority of small businesses do make this choice.

We did some research about 1.5 years ago on how small business owners define success.  We found few small business owners had an objective of growing their small business into a medium or large business.  Most felt their businesses weren't capable of becoming big, or they believed it wouldn't be worth the effort to get big. 

Since that project, we generally ask entrepreneurs and small business owners about this in our interviews and surveys. 

We consistently hear from established small businesses that most are looking for modest growth and many no growth, with owner lifestyle reasons increasingly the reason given. 

Unlike the risk myth, I understand where this comes from.  High growth entrepreneurs are widely celebrated.  This leads to the impression all entrepreneurs are trying to build the next Google or Apple, even though most are not.   

Comments

[Neale]

The myth of unbridled risk taking is deep rooted in our culture.

How would you go about dispelling this myth?

While this economy may force some people to get over the hurdle presented by this myth, I doubt many people would make the move otherwise.

[Adrian Rivers]

I have been thinking about this "risk" and "growth" stuff for a while and have reached the same conclusions. There is a danger that we develop a culture that says small firms "ought" to grow, that leaders "should" take risks, that we "must" exude confidence.

But when small business owners take risk and go for growth they are not just taking risks with their own investment of time and money, but with the livelihoods of their staff and their families. Taking the risk of going for growth should be a deliberate and considered decision.

I have written about this in my blogs "Why Grow" http://www.rivcomservices.com/2009/12/why-grow/ and "Confidence, Optimism and Passion" http://www.rivcomservices.com/2010/01/confidence-optimism-and-passion/