If you were to ask most people what the definition of an entrepreneur is, the majority would probably say someone who is not afraid to take risks.
The actual definition of an entrepreneur is:
“A person who is willing to take significant financial risks in the pursuit of a dream and who is also willing to make hard sacrifices in the pursuit of those dreams.”
But what is financial risk?
Financial risk is taking action that has two possible outcomes:
- Bad – Some probability of losing a lot of money.
- Good – Some probability of making a lot of money.
When you take financial risk, you are exposing yourself to either a good or bad economic outcome.
Most individuals are risk averse. They do everything possible to avoid taking risks, preferring the old, worn path taken by so many. They pursue careers that avoid risk at all costs.
When it comes to risk, the vast majority focus only on the possibility of a bad outcome. They only see the pitfalls, failure and the negativity of taking a risk. In fact, they view those who take risks as reckless and irresponsible.
This fear grabs most people with both arms and prevents them from taking any action at all that involves risk.
Successful entrepreneurs, however, are able to overcome fear. They are like Harry Houdini, able to break free from the grip of fear and take action on their dreams and goals. Are successful entrepreneurs simply more courageous than most people?
Not really. They have certain Habits that enable them to overcome the fear of risk:
- They Prepare Before They Leap – Successful entrepreneurs study and practice relentlessly and become experts before they take a leap. When they do take risk, it is typically an educated risk – a risk they studied and prepared themselves for over many years. Educated risk means you understand what can go wrong. There is no uncertainty about all possible outcomes.
- They Expect and Prepare for Failure – Fear loses its grip when you pursue anything expecting mistakes and failure. Because successful entrepreneurs expect and prepare for failure, if the worst does happen, they are able to navigate around it because they prepared for it. They have a plan for the worst case scenario.
- They Know How to Pivot – Successful entrepreneurs are constantly seeking feedback. Feedback gives you the information you need to allow you to pivot and adjust. Pivoting means you are not locked into a specific way of doing things.
- They Focus on Their Vision – They have a clear picture of the outcome they desire. This means they are not easily distracted when something goes wrong. Their vision allows them to stay focused and persist.
- They Surround Themselves With Experts – In any project, initiative or pursuit, things will go wrong. Successful entrepreneurs anticipate that things will go wrong so they surround themselves with individuals who have done what they are trying to do; who are experts at what they are trying to do. When something does go wrong, they lean on their experts to help them navigate the pitfalls.
- They are Eternal Optimists – Successful entrepreneurs live in a world of possibilities, where optimism rules their behavior. This habit of being positive every day clears away the fog of fear and negativity.
- They Persistently Take Action – Every day, successful entrepreneurs take action. Fear is at its greatest just prior to taking action, so forging the habit of persistently taking action will lessen or even remove fear.
- They Manage Expectations – Successful entrepreneurs set realistic expectations. Oftentimes, they set very low expectations. By managing or lowering expectations, they are not easily disappointed. And this keeps them emotionally in the game. Setting unrealistic expectations and then not meeting them, can cause you to throw in the towel and quit on your dreams. Because successful entrepreneurs set realistic expectations, they are able to persevere longer – they become more persistent in the pursuit of their dreams.