Wednesday, June 16, 2010

Careers and risk taking

Catching up with friends I often get comments along the lines of 'Good on you for taking a risk and leaving your job to start your own business, I wish I could do something like that.' Starting your own business is certainly not the most conservative thing to do, but I don't think it's such a risk.

When we started Shoes of Prey, here was the decision making process that Mike, Jodie and I went through:

The best case scenario is we build a good business that we can either continue to work on or sell. We'll have done something we loved and ideally be in a good position financially.

The worst case scenario was that the business failed and we're down $50k in startup costs and a hundred or two more in lost salary, and we would have gone back either to our old jobs if they would have us, or something similar having learnt a lot more than we would have otherwise.

Given we'll work until we're 70 or 80 anyway, what's $50k and a year or two of lost salary now? In our minds the best case scenario far outweighed the worst and we were confident that the odds of the best one happening outweighed the odds of the worst. That seemed like a good bet to us so we did it.

Another thing we did that looks like a risk on face value is Jodie leaving her job to work on Shoes of Prey full time. This does mean Jodie and I have no salary at the moment, however having Jodie work on the business means it's more likely to succeed. Things are currently going well but if that were to change and the business fail, we should hit that point sooner meaning we can move onto something else earlier than we would have otherwise saving Mike and I additional salary that we would have lost otherwise. So it's really wasn't a big risk having Jodie join us full time at all.

A few of my friends work in legal roles, don't enjoy them and plan to leave, they just haven't worked out what they want to do yet. I actually think they're the ones taking the biggest risk. My first job out of university was as a lawyer. I was having a career chat with one of my mentors and he explained that he had been a lawyer for 10 years, he really didn't like it but he had a mortgage and had settled down and gotten married. If he left his legal role to do something else, his salary would halve because his skills were so specialised. He'd left leaving something he didn't like until too late, and now he was stuck with it.

Going down that path is a big risk for a lot of lawyers who don't like their jobs and afraid to look for something else. It's said so much that it sounds cliched, but it really is true, you only live once and work takes up a huge amount of your time. It's worth putting in the effort to find something you like doing, and as I see it, the risk of falling into the trap of spending your life doing something you don't enjoy is a big one that is best avoided.

As I see it, if you plan for it properly, starting your own business is a lot less of a risk than it might first appear. I'm keen to hear other people's thoughts on this.

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  1. I couldn't agree more! I think people just aren't used to breaking the mold.

    I so would of regretted not giving my idea a chance, best thing I did, not necessarily profit wise, but journey wise :)

  2. Great post Michael. I'm in the process of working through and planning to make the jump into my own business. I'm finding that on the whole people are hugely supportive, but there are always a few who naturally question the move, lawyers strangely enough :) I do go through stages where I have doubts, but I'm very aware that for me personally, this is the best time for me to make that change! Completely agree with Simone, I'll regret it if I don't give it a go.

    ps...I love the blog, it's so interesting to hear your journey with Shoes of Prey. Thanks for sharing!

  3. There are a lot of non-financial risks that drive decisions. For one, fear of failure. Some people just can't handle it, even though the consequences are far less damaging than ever thought.

    Law, consulting and banking all do psychological testing to try and find over-achieving but risk intolerant people. That's the segment they are after and that's why you see so many people in those industries who 'are just staying for 2 years' and complain but, most importantly for those companies, never do anything about it.

    There are others that are simply scared shitless of being accountable. It's easier to optimize their behavior around office politics and succeeding in that fashion than to face the raw feedback cycle of a startup.

    'Risk taking' as a concept is also empty without the discussion of reward. On every basis, starting your own company is likely a better financial reward. But it's a better financial reward because so few people do it. And at the root of that I think is people's fear of failure and fear of accountability.

  4. Thank you so much for writing this. This kind of articulates what is filling my head at the moment.

    And to add to the equation, its not only the risk of possible scenarios (worst case and most likely), but also cost of maintaining the status quo. If you don't like your job and stay in it, you're pretty much guaranteed for another 30-40 years of a pretty bad situation.

    I agree with the other comments too and fear of failure is a huge issue! However I do think financial risk is the main impediment, but mainly a misconceived notion that you need a lot more money to be comfortable than you actually do. You don't want to change the status quo due to a fear of an uncomfortable reality.

  5. Great post! Risk like everything in life can be controlled but most people just never take the chance. Continued success in your business.

  6. Simone - glad to hear you're enjoying the entrepreneurial journey and I hope nomuu is going well!

    Cath - Thanks for your kind words and I love the design of your Tea with Mary site. One thing I didn't mention in the post is that we did as much as we possibly could have on Shoes of Prey part time while working in our full time jobs. It was only when we got to the point where we couldn't take it any further without doing it full time that we weighed up the pros and cons and decided the risk of leaving our jobs was worth it. If you can, I'd suggest doing as much as possible before quitting your job. Judging by your site, it looks like that's exactly what you're doing. :)

    Nikiscevak - Great point about the fear of failure, that's definitely a huge influence for people. The chances of your startup failing are definitely higher than most other things you can do career wise and for some people, particularly lawyers, that fear of failure is a major reason not to leave your safe, secure profession and try something else. Personally I think people can place too much weight on the fear of failure, I think even if Shoes of Prey failed from here Jodie, Mike and I would have earned the respect of a lot of our peers for giving it a go and people wouldn't look down on us for having 'failed'. That said, everyone's got to weigh up their own risks and priorities to make their own decisions on what's best for them.

    JenTran - Couldn't agree more about needing to weigh up the risk of failure against the huge cost of maintaining the status quo, if you don't like the status quo. If you don't like your job and you're in the early part of your career, I think it's a no brainer to try something else. Work is a huge part of our lives, no point in spending all that time on something you don't love doing if you can help it at all.

    David - Thanks for the well wishes and I hope the Computer Blues blog is going well. :)

    Matt - Thanks, and I'm guessing this risk thought process is exactly what you went through a few months back. Glad you made the decision to give your own business a proper go!

  7. Foxy,

    I find your posts extremely motivating. :)

    All the best!

  8. Absolutely right, Fox.

    I have had lots of friends come up to me and say, "I want to start a business too."

    And, I told them to just do it and don't hesitate..!! A career can be picked up again if need be but a business opportunity lost is lost.

    After a few moments of determination, the "reality" sets in and the fears of the unknown comes back and they back out of it.

    Such a shame really... Its a recurring theme amongst disgruntled educated people...

    Catch 22 - the more educated you are in a high-flying career, the less likely you are to take the plunge into the abyss of business. ;)

  9. Beautifully written Foxxxy!! I totally agree. I think that the older you get, the more you realize that the only real currency is "time" (not money, or possessions or shiny new toys). I think everyone needs to think about the priorities. I value my time more than anything and I love travel and writing so I've created a life where I have a job that I enjoy but also have lots of time to travel and explore the world :).
    So proud of you guys for working so hard on something you enjoy now so that later you will hopefully be financially better off and have more time/flexibility to do other projects/start businesses.
    Also most of, if not all, of my friends who are lawyers really hate their jobs even though they make 2x as much as I do in salary which I think is very telling.
    Life really is too short. It all goes by so fast and one day we'll find ourselves 70, a bit wrinkled, hopefully still healthy, and looking back on a life well-lived. I hope to look back with little to no regrets. Live it up. Cheers. :) xox