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Small Business Comes with Big Risks

BY NICK | 2 min read

"I could start a business."
"I should just start my own business." 

If either thought has entered your mind (and perhaps just as quickly departed), you're not alone.  The small-business buzz of ownership, productivity, community, and personal actualization are especially hard to escape these days, what with the exciting tales of unicorns and angels, incubators and accelerators coming out of the tech industry.  Don't you want to build next Uber for A Thing? There are hundreds of answers to hundreds of questions on Quora that go something like:

"how can I start a business at 17 with $250, and make enough money to pay for college?"

"I want to make $5,000 extra dollars a week but I work full-time. What business should I start?

"What's a quick and easy thing I can buy from Alibaba and re-sell online?"

Is that cynical snickering I hear? Well, rightly so. The internet and its infinite hype machine has a lot of us thinking we're the next Zuckerberg, just biding our time before we re-write history with a little bit of code and the right shade of blue. 

And yet, something in many of our jaded hearts pulls us back to reality with that nagging thought: It just can't be that easy.

According to the facts and a plethora of anecdotal evidence, your jaded little heart is probably right. 


The Small Business Administration (SBA) recent data states that nearly 66 percent of small businesses will survive their first two years.  If you do go for it, you've got a just-better-than 50/50 chance of making it work (assuming your entire business plan doesn't call for retirement after a hefty 24 months of start-up.) 

Beyond that, 93.1 percent of operational small businesses have annual revenue of less than $250,000, which doesn't sound all that bad, until you factor in that 57.1% have revenues of less than $25,000. 

Obviously "survival" isn't the same thing as what most people would call "success," but let's take a step away from the revenue aspect for a moment. After all, why would anyone step away from the guaranteed income of a career, to chase down the unknown?  

It's a one-of-a-kind educational opportunity
To be fair, starting a business is the only way to actually learn how to do it, and it's the only way to know if you have what it takes. Taking that leap requires courage, and perhaps in some cases a foolish kind, but it's still commendable. Risk isn't something we humans are especially fond of; our brains themselves are designed pretty well for perceiving it, and quickly reconsidering the choice that led us there.  The ability to acknowledge a certain amount of risk and proceed anyway gives us a  sense of freedom that is very likely unique to the human experience. 

We're biased by our own optimism about our lives
In pursuit of this experience, many people will  work and save for years with the intention to break out on their own, laying it all on the line. Imagine taking out 30 years worth of a retirement fund and heading to Vegas with it. Yeah, it's not all that different. On the opposite end of the spectrum, some will forego the perceived security of a college education, more willing to incur debt trying to actually build something rather than being told how (can you really blame them?) Some, of course, will forfeit the country of their birth, risk punishment or even death, to obtain those 50/50 odds US-born folks take for granted, or even write snarky blogs about. Sobering, isn't it? 

No good idea ever goes ignored
Really, as recent history has proven, you might have the entire hotel or private transportation industry going in the opposite direction, but if your business model does something great, it could be a game-changer. Global communication and connectivity allows us to see more clearly than every before that nothing can really stand in the way of a majority "vote." Eventually (but now faster than ever) markets reflect the best solutions, as chosen by the people. Is your idea history-in-the-making? Again, with that whole courage thing mentioned earlier, you just won't know if you don't put it out there. Yes, you're risking failure, but if you truly believe in what you want to do, not acting is far more risky behavior. 

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