Risky Business

Startup and risk go hand in hand. But how much is too much?

From the chutes and ladders of day trading to extreme sports that stretch the limit of health-insurance policies, Americans are more fascinated with risk now than ever before. Even the current crop of game shows lure players into gambling away the thousands of dollars they won only moments before. It's no wonder, then, that entrepreneurs are gaining admiration and attention.

Long perceived as the biggest risk-takers of them all (besides, perhaps, bungee-jumpers and skydivers), entrepreneurs tread a less-traveled path, eschewing steady paychecks and regular hours for a more exciting brew of financial possibilities, personal satisfaction and self-owned business success. Like vacationers on their last day in Vegas, they're tempted to bet it all for a shot at the big money-but too much risk, just like not enough, can sink a company before it ever gets off the ground. How can you walk the thin line and manage risk instead of having it manage you? For starters, experts and entrepreneurs agree, the first thing to watch isn't your financial statement, but your level of personal comfort.

Mental Preparation

"There are known risks that you can plan on," says Elaine Biech, a management consultant and author of The Business of Consulting (Jossey-Bass Pfeiffer, $39.95). "As an entrepreneur, you know you're going to be working 60 to 80 hours a week. You need to have the physical and psychological stamina for that, as well as your family's support. You just have to realize that it's a risk to go off on your own."

Realizing that the risk may not be just yours, but also your family's, is a reality check best faced at the start of a business rather than midstream. The more you mentally prepare yourself, the better the chance your gamble will pay off. "You have to be willing to take the psychological risk, knowing that every single thing you do is yours," says Biech. "You have to accept all the responsibility."

Kevin Wielgus is familiar with that kind of responsibility. Wielgus and his partner/fiancée, Dee Tomek, started their Rolling Meadows, Illinois, e-commerce solutions company, VirtualSellers.com, at a table that doubled as both desk and eating area for Wielgus' daughter and Tomek's two children. Despite having three mouths to feed, he and Tomek took a second mortgage on their house to start the business, then a third mortgage to keep it going. Wielgus devoted himself full time to the company, while Tomek kept her day job and did VirtualSellers.com tasks at night.

It wasn't the financial insecurity that caused difficulties, because the amount of their debt actually gave them the determination to move forward. The real risk, Wielgus said, was personal. "I risked my savings, but Dee risked her sanity, working full time during the day and then coming home and working until the wee hours of the morning on our business," he says. "It was difficult for the children to understand why we were working all these hours, and it was a big strain on our family life. A big risk was becoming so personally involved that it put a lot of stress on our relationship. But since things are different now, those stresses are gone."

What's different is that the company has taken off, reaching sales of $150 million last year. Without the happy ending, would Wielgus do it again? Definitely, he says. "It takes a very strong person to take as much risk as we took. You see so many people intent on comfort, they don't take the steps to get things rolling. The result is that everybody wants to take baby steps, but that doesn't work. You need to take that leap."

It's also possible that you'd breeze through a situation that would leave others in the corporate world breathless. Five years ago, Gerard Powell, 36, formed his East Stroudsburg, Pennsylvania, cosmetic-surgery marketing company, thatlook.com Inc., with more than $400,000 of his own money, and he didn't look back. It's all a matter of point of view, he insists. "Entrepreneurs have a different perception of risk," he says. "What a lot of people would consider risky isn't terribly dangerous to those who are grounded in the entrepreneurial psyche. I think they tend to be optimistic and confident; they fear personal failure more than financial failure."

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This article was originally published in the July 2000 print edition of Entrepreneur with the headline: Risky Business.

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