Can you take the risk of starting a business? I think most of the focus in starting a business is about the specific risk in the business, but Eric Williams notes a problem with what he calls general entrepreneurial risk on the Oregon Business Broker’s Info for Business Buyers.

Writing specifically about business buyers (as opposed to business starters, generally a different group), he says:

I find that some prospective buyers obsess about and over-analyze General Entrepreneurial Risk, rather than Specific Business Risk.

What’s the difference?

  • Employee turnover is general risk, but dependence on two very important employees is specific risk.
  • Losing clients is general risk, but a business that depends on one client for most of its business has specific risk.

What I realized, reading Eric’s post, is that I normally look at a business plan with an eye on the specific risk. But in starting of a business, buying a business, or running a business, you also have to acknowledge the general risk out there. Including the rest of Eric’s list:

  • uneven cash flow
  • a declining economy
  • an important vendor going under and
  • many others.

If you’re going to start or grow a business, you live with a lot of risk. And remember, by the way, that risk goes both ways: There’s a lot more upside to owning your own rather than just being an employee, but more downside, too.

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Tim BerryTim Berry
Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.