“Isn’t starting a consulting business risky?” asks many a nine-to-fiver. Well, sure, there’s risk in starting a business, but there’s risk in anything. If there’s anything the last 25 years have taught us, it’s that there’s no such thing as a job for life. Even secure government jobs have seen downsizing, hiring (and promotion) freezes, low wage increases and more.
Building risk tolerance through consulting
When you go into consulting, in some ways, you may find that you have a little less risk. Whereas you might have staked everything on one employer before, a portfolio of clients can potentially provide multiple revenue streams. Rather than depending on the fate of one organization, you’ve spread your risk around. In fact, depending on how you structure things, you may not even depend simply on consulting. Over the years, my own consulting business has also included revenue from products, commissions, facilitating, coaching and teaching. Building your risk tolerance may involve similar steps.
Of course, financial risk just poses one kind of risk – building tolerance for several kinds can help you build your business. Over at YFS Magazine, there’s an article about the University of Missouri’s Entrepreneurship Alliance. The EA has come up with some lesser discussed ways to build risk tolerance – travel and physical challenges – as well as more traditional recommendations, such as mentorship, financial management strategies and face-to-face communication.
The comment about travel really stood out for me. When I launched my business, I had just come back from backpacking Europe. I had become pretty familiar with launching into new territory, arriving with only a few dollars in my pocket (smaller towns tended not to have bank machines and a late night or early morning arrival meant the cambio was closed), striking up conversations with strangers and trying to make sense of new systems and processes.
Physical challenges, say the EA, can build your risk tolerance too. Perhaps that’s why I took my business into new territory after embarking on a new exercise regime and birthing my first child. Hey, there’s nothing like a 56-hour labour to build your tolerance for risk. That year, I moved into new consulting offerings, built new products, took up my first formal teaching assignment and even winged it as a math instructor for a while. (That may not sound like risk to some of you, but my undergrad was in English. Granted, I use math all the time now, but it was still a leap of faith.)
The EA alliance article talks about bridging the gaps in risk tolerance between young entrepreneurs and more experienced ones. I’m not sure young people are necessarily more risk averse. Launching a business when you may have roommates, cheap rent, flexible living arrangements, no children, no aging parents and so on may allow you to take risks you might have thought twice about later. Of course, in mid-life and near retirement, entrepreneurs have a wealth of experiences, large networks of contacts, perhaps more financial resources, and a strong sense of themselves and their talents, which can reduce many other risks.
The lesson, then, is that you can work at risk tolerance through life experience. Whether it’s climbing a tower, hopping a train to rural Laos, navigating the health care system for an ailing family member or some other experience, each life experience offers a chance to gain new skills and compentencies, which, in turn can reduce our risk. That’s why I recommend to people interested in consulting that they work through our consulting books, specifically the personal inventory in Discover Your Inner Consultant, our consulting business startup book. Exploring the richness of your life and work experiences, along with your other unique attributes, can help you find the right business for you. And, next thing you know, your adventures in consulting will add to the depth of experience you carry with you.