Knowing your risk tolerance can act like an internal compass, guiding your business growth decisions.
I’ve met plenty of people who fit that description, but it’s not as widespread as you might believe — or as it is depicted in the media or in the movies. Not everyone in the business world is Gordon Gekko in Wall Street. And that’s a good thing.
For example, I’ve been working with an entrepreneur who has a solid business plan and a market for his product. Growth opportunities abound. A $5 million loan backed by the Small Business Administration (SBA) awaits his signature.
So what’s the problem?
Turns out the entrepreneur is waffling on pulling the trigger on the loan because he’s scared to make a personal guarantee on said loan. This has gone on for months and left his business stuck in neutral because it needs cash to grow.
In the meantime, the entrepreneur is seriously considering bringing in equity investors, a move I don’t typically support. Having equity partners may allow you to sleep at night and solve your immediate cash-flow problems, but they come with their own set of potential problems, including everything up to the entrepreneur being forced out of his own company.
Don’t play the shame game.
I’m not here to shame the entrepreneur; he is young and has a wife and small children. If his business fails — no matter how promising his business may appear, there’s always that chance — he literally will lose everything.
It’s perfectly reasonable that he’s having some second (and third) thoughts about accepting the loan. Not everyone has nerves of steel. And family has to come first.
There’s a moral to this story: You have to be comfortable with who you are. The only thing the entrepreneur might have done differently is to have decided these kinds of philosophies early on — and then stuck with it. It may sound like a cliche, but be true to yourself; don’t let someone else define you.
If this entrepreneur decides against accepting the loan, all is not lost. The equity play would buy him time and potentially things will work out swimmingly. And if he chooses against both equity and the loan, his business likely will survive.
Granted, the company probably won’t be too dynamic, but if the entrepreneur can meet his family’s needs — and sleep at night — maybe he’s taking the right path.
Too often, our focus is on wildly successful entrepreneurs, in part because they’re usually interesting, in part because nearly wants to at least dream about making it to the level of the Lifestyles of the Rich and Famous.
But there’s certainly no shame in being merely successful while avoiding the stresses that will otherwise ruin your life. Remember: Everyone has different priorities.