Risk
by Margaret Heffernan

What makes a great entrepreneur? Some research suggests that it’s genetic – that to be an entrepreneur, you need entrepreneurial parents. My mother started several businesses – and my father followed suit when he saw that she was making more money – and having more fun – than his corporate career could ever deliver.

Others say that a high tolerance for risk is essential. But risk is a funny thing. Throughout the restructurings of the 80s and 90s, a friend of mine was laid off from bank after bank. He thought that it was the big institutions that could provide him with security–whereas my entrepreneurial career struck him as hopelessly dangerous. So he was confused to find himself regularly unemployed - while I never was. It turned out to be safer to embrace risk than to search for security. It isn’t just that what’s risky and what’s safe changes. Men and women perceive risk differently. In some ground-breaking studies, Exeter academics Michelle Ryan and Alex Haslam have been investigating what they call the "glass cliff" phenomenon, which shows that women are more likely to accept high risk opportunities which their male counterparts avoid. In part, they say, it may be that women just don’t see the risk. Certainly for Paloma Perez, starting the Hot 100 company "1927" didn’t feel like dangerous. "It was a dream, really: maybe I can do this on my own! We started the business in September 1998 – and in October, I was pregnant! But I just figured: life is going to be busy, whatever happens." Like all entrepreneurs, Perez has found that she’s working harder than ever – but with more freedom than any established business would have provided. With two small children, dividing her life between London and Madrid isn’t exactly an easy ride. "But I would have felt I’d missed the chance if I hadn’t done it. You can’t look back – there isn’t enough time!" Ryan and Haslam also hypothesize that women may perceive feel they have less to lose. It isn’t, after all, as though the establishment has a long track record of treating women well. "When I started Ambition Recruitment Services," says Penny Streeter, "I was in homeless accommodation with nothing but a deck chair. My marriage had broken up, I had two kids and no money. A friend gave me a corner of an awful office and I just set to work." Streeter acknowledges that a more staid route would never have worked for her. "I’m an impossible employee, because I’m very dogmatic about what I like and what I don’t like. And I’m a generally energetic person and I was determined to make this work." Many female entrepreneurs say that they started their businesses to create the kind of adaptable working conditions, and diverse cultures, that established corporations still don’t provide. For these women, it is the traditional route that looked perilous. This year, the Hot 100 features more women than ever before – and a wider variety of national and ethnic backgrounds. This makes sense to me because I’ve often felt that it is newcomers to the business world who are prepared to take big risks. With less invested in the status quo, they have more to win than to lose. Those who’ve never ruled the business roost take nothing for granted, challenge assumptions daily and demonstrate a level of determination that sweeps obstacles and barriers aside. When Emma Guyton founded ADR plc with partner Keith Churchouse, the risk of failure was irrelevant. "I could never get excited going into the Careers room – whereas being independent, and able to work hard on something, just made me feel good. We did do research into business failures but the thought never made me think twice. I just thought – that’s what I want to do. I’ve talked to hundreds of entrepreneurs and I’m always struck by how little risk weighs on their minds. They are motivated by a love of autonomy, sometimes competitiveness, always excellence. As newcomers, part of what they bring to the business environment is the desire to change the game. This is more motivating than money. "I don’t think it was massive pound signs that drew us towards this venture", says Emma Guyton. "It was more that we wanted to achieve something. We were convinced that what our competitors were doing was shoddy and we wanted to be the best." For these business owners, money is the by-product of their motivation, not its source. "When I started, the market was very abusive", recalls Paloma Perez. "The big brands were imposing big minimums on the stores and they were locked into huge exclusivity agreements. We wanted a more honest approach. We believe that what we are offering is interesting and we won’t put a gun to your head. In that sense, we are not so much driven by money. Everyone wants a success story – but we want the freedom to grow authentically." When I was younger, I always used to wonder why it was that the rich people I knew never seemed to be very happy. Was it, I asked, because money didn’t make you happy – or was it the itchy, unsettled, people who were driven to make the most money? Now, I guess I think it’s both. I can’t think of a single entrepreneur who really does it for the cash. Like Emma, Penny and Paloma – they do it because they just can’t not.

This article was originally published in Real Business magazine.

© Margaret Heffernan, 2005

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