An extract from my second book, Power Climb: Growing Your Small Business which was published in 2012.
Some people consider that entrepreneurs are risk takers, in my own research I found an interesting study asking ‘why do pilots make better CEO’s?’
I’m a pilot myself, holding both European and American licences since 2000, so it had particular relevance to me as I’m also a CEO as well.
The study raises some interesting points, yes you do have to take risks when starting and growing a business – however these should always be calculated ones rather than just sensation seeking!
When I am flying an aircraft I’m always looking at ways to minimise the risks. One of the ways to do this is to study reports of incidents that have happened to other pilots and what they did to ensure a successful outcome.
It is also something that can be done by the self-employed – too many times business owners make the same mistakes, when studying the methods behind the successes of others could make all the difference…
When we are looking at risk taking, if you know someone who is still employed and considering self-employment then there are opportunities.
By being flexible, and if their employment contract allows it, they could even start that self-employed business today and operate it on flexible hours outside of the 9-5.
This can be a good way to start a new business – they still have a regular income from employment and can also work on their self-employed business around that.
Initially it may just bring in some useful extra income, but they are also building up the foundations of a successful business that could support them should anything happen to their employed role.
And it also makes things easy when they decide to switch to being full-time self-employed. It is much better to have a business with several months operation and experience behind them than to start one up suddenly from scratch. It takes time to get things set up and develop relationships, and they can get ahead of their competitors.
There is also an additional benefit, that many people don’t know about, of tax losses. When you start a business there are normally quite a few expenses, even if you are minimising the costs. It could be that they have a loss for their first year of operation after taking account of these. If they do, then they can actually get tax relief for this by claiming it against the employed income they have had in the year.
This could bring in a well needed tax refund, that could be reinvested in the growth of the business.