Should I Set Up As A Consultant?
Or is it too risky?
Posted by Jacky Sherman on 15/07/2020 @ 8:00AM
A personal recollection talking to my husband over breakfast. In the early 1990’s when we met, he’d been made redundant and spent all his energy getting back into employment. His view was that setting up on his own was too risky ...
Setting up as a consultant can seem to risky for some!
copyright: antoniodiaz / 123rf
Then he got a job. What a relief! Until, less than a year later he got made redundant again, this time with no payout, in fact, he left with them owing him money as the company had gone bankrupt.
"That was his light bulb moment!"
Employment was just as risky as self-employment. He was, and still is, extremely risk-averse. He was, and still is, "not a natural salesman" either. Yet within a couple of years, he was earning more than when in employment and has continued to achieve this through another recession, treatment for cancer and now lockdown.
He would never call himself an entrepreneur, yet he matches the dictionary definition and the behaviours of those who are successful.
Dictionary definitions of an entrepreneur stress the risk. Whilst they choose different ways of expressing it, they are all variations on this theme. Someone who sets up a business, taking on the financial risks in the hope of a profit.
All stress the concept of taking the financial risk. For many people, that adds to the flavour that an entrepreneur is a high flying, wheeling and dealing individual who will bet their house on the next scheme turning into millions.
Even if that's extreme, the image is usually someone who is willing to take high risks for great returns and to a degree flying by the seat of their pants. We often build a whole Hollywood stereotype around them by adding in that they are divorced and a total stranger to their children. Success being signified by the big house, holiday island and trophy second wife/husband on their arm.
The reality, of course, isn't like that, well not for the vast number of people starting up their own businesses. According to Adam Grant in his book the Originals, the successful high flyers are not "seat of the pants" wheeler-dealers either, but more calculated risk-takers. They offset risk in one area with a safety net in another and underpin the whole venture with attention to their upfront business planning.
One of the first business models I was ever introduced to was the simple risk assessment grid along two axes. How likely something was to happen and what the impact would be if it did happen.
If you make a list of potential risks to your new venture and plot them on the grid, you get a feel for areas you need to pay attention to mitigate the risk, as on the left. Alternatively, if your grid looks like the one on the right then a radical rethink may be in order.
"A note of caution here!"
This is a highly subjective exercise based on your perception of that risk and therefore difficult to do alone. Listing your risks and giving them a score on the grid will vary hugely depending on how risk-averse you are naturally and your frame of mind at the time of doing the exercise. For instance, if you have just been made redundant for the first time then your world view and confidence are likely to be more negative than usual.
Here's where a business mentor, advisor or coach can really add value to your upfront planning and give you confidence that you have covered your risks in a realistic manner.
Until next time ...
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more, it may be a great idea to give me a call on 07970 638857. Let's have an initial chat over a coffee and see how I can help you.
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