Bedrock or High-Risk: Which Type of Entrepreneur are You?
Retailers are generally bedrock entrepreneurs; fast-track Silicon Valley startups are generally high-risk entrepreneurs. These two examples should give you good clues about the two types of entrepreneurs and their mindsets. It’s like the difference between the tortoise and the hare in the famous fable. Except, in entrepreneurship, both the tortoise and hare can be winners.
Here’s the thing. You need to know which type of entrepreneur you are – it’s all about your comfort level and staying consistent with that. When you are comfortable with your business approach, you will stay motivated and enjoy what you are doing. You will make business decisions based on your mindset. When you attempt to be something you are not, you are destined to fail.
Defining Bedrock and High-Risk
Here are the basic characteristics of a bedrock entrepreneur:
- He is risk-averse, not wanting to experience any loss, be that financial, reputation, or status.
- He will have a business plan and goals that are sequential, gradual, and are more long-term.
- He will look for investments from traditional sources and/or individuals he knows.
- He is happy with steady and moderate revenue growth.
On the other hand, the high-risk entrepreneur does the following:
- He is willing to aim high and fast and can deal with fast failure. He will just move on.
- He is looking for maximum, rapid gain in money, reputation, etc.
- He is willing to look for alternative and even risky investors, using other people’s money as much as possible.
Digging Deeper into the Two Mindsets
Here are some questions to ask yourself, if you are not sure yet which type of entrepreneur you are.
- From where would you rather obtain financing for your startup?
Bedrock entrepreneurs tend to use their own money or borrow from people they know and trust. They may also take out a bank loan, and lease rather than purchase equipment and office space/facilities. Their objective is to stay conservative, because that will reduce risk.
The high-risk entrepreneur will take money wherever he can find it, usually from venture capitalists or crowd funding. They want a large infusion of capital so they can grow fast and large and make buckets of money quickly. At the same time, they know they could fail, and that is okay, because the next best idea is just around the corner.
- What is Your Level of Patience?
Bedrock entrepreneurs tend to be very patient. They are willing to start small, expand as their profits will allow, and consider their business as the single one they will ever have. Sam Walton grew his Walmart empire this way, starting with a few small retail stores.
High-risk entrepreneurs are far more impatient. They want to get to a rapid launch with hopes of making a huge profit quickly. If they fail, they simply go back to the drawing board with the next best idea. They may often run through many ideas and business models before one that “works.” And they are often happy to sell that successful startup, make a “killing,” and start something new. PayPal started out as a site for money exchange via Palm Pilots. That didn’t work out, obviously, but look what it has become today, because owners were only too happy to try something else.
- Are You a Loner or Are You Collaborative?
Most bedrock entrepreneurs are solopreneurs. They want to begin their businesses on their own, or, at the most, keep it in the family (think Waltons). They are not comfortable hooking up with strangers either as investors or as partners. They worry about the risk of disagreements and giving up their singular control over their business.
High-risk entrepreneurs are often comfortable with business arrangements and investors who are strangers. And if a startup fails, they do not have to worry about friendship and family breakups too.
- What is Your definition of Success?
Bedrock entrepreneurs tend to set personal goals that will be met by the success of their business – reputation, standing in their communities, and the employment of people with whom they want good long-term relationships and who will grow as the company does. Success is certainly tied to the profitability of the company, but the personal goals are top priority.
High-risk entrepreneurs tend not to focus on internal goals – more on objective and external factors, such as their company’s value, such as stock price. They do not employ for long-term relationships but, rather, will keep staff only if they are continuing to contribute to the company’s objective value. They will take investment capital from those they do not know, and are happy to keep investors at “arm’s length.”
Why It is Important to Know Which You Are?
There is no doubt that both types of entrepreneurs are valuable to a national economy. The bedrock entrepreneurs provide stability with long-term businesses and enterprises that provide stable employment and contributions to their communities. High-risk entrepreneurs, on the other hand, can provide those innovations that move a country forward, even on a global scale. Consider business translation companies, for example.
It is important that, as an entrepreneur, you know which type you are and stick to that approach to your business. If you try to be someone you are not, you will end up making poor business decisions. Consider the bedrock entrepreneur who decides to take on investors whom he doesn’t know. Then, all of a sudden, he is making decisions based upon what those investors want and expect rather than on his own personal goals. In the end, he will be miserable, and his motivation to make the business grow will die out.
And it’s difficult to make yourself into a hybrid. You will not be comfortable, if you do this.
The bottom line is this: be who you are stick with that consistently. The world needs both types of entrepreneurs. Bedrocks may not get the “splash” and publicity that high-riskers do, but they will experience the satisfaction of steady growth and personal goal achievement. High-riskers may not have the stability of bedrocks, but they will have the thrill they always seek from taking chances, getting new ideas to market quickly, and making the “splash” they love.