Fortune favours.
Risk is an inherent part of being an entrepreneur. We are all born into a world not entirely of our making.

But it is also a world in which individuals can either choose to accept the status quo, or decide to change it. Of course, starting a business isn’t the only way to do this, and entrepreneurial instincts can be realised without personally starting a company. But there are few things quite like the risk of deciding to strike out and start a business. After all, of all the firms founded in the UK in 2016, less than two-fifths were still operating five years down the line¹.

But the decision to start a business is generally a calculated one – because it is only by taking risks, in the end, that lucrative opportunities can also be seized. While not every entrepreneur would be as empirical in their assessments, all of them make the sort of estimates used by the likes of Jeff Bezos (who gave himself a 30% chance that Amazon would succeed),² or Elon Musk (who gave SpaceX a 10% chance of success), when considering the possible future success of their venture.³

To better understand entrepreneurs’ relationship with risk, our survey began by asking business owners the extent to which they are risk-averse or risk-tolerant when it comes to running their businesses.⁴ Perhaps surprisingly, we found that nearly half of entrepreneurs actually see themselves as risk-averse (48%). Only 23% describe themselves as risk tolerant, with just 2% seeing themselves as very risk tolerant.

Yet this headline figure obscures a deal of variation between different sorts of entrepreneurs. Owners of younger businesses and those of more established ones, for instance, displayed different risk appetites on average. Among founders whose businesses had been operating for five years or more, 31% described themselves as risk-tolerant, compared to just 17% of founders who started their companies in the past three years. On the other side of the same coin though, a majority (54%) of founders of businesses operating for less than three years described themselves as risk-averse, this fell to only 37% of founders of businesses over five years old.

There might be a number of explanations for this difference. First, it is a brutal fact of reality that the majority of startups fail to survive their first few years.⁵ It’s rather difficult to be risk-tolerant while fighting to keep the shop open. The process of creative destruction might naturally weed out founders who fail to embrace risk as much as perhaps they should. Secondly, experience brings with it deeper networks and know-how. Founders learn to manage risks when they have access to the tools that can protect their businesses. Thirdly, the timing of our research may have influenced entrepreneurs’ answers as well. Businesses less than three years old have lived through a pandemic, a war, and Brexit as infants. These formative experiences may have made them less prone to risk.

We then sought to understand how entrepreneurs’ attitudes towards risk had – if at all – changed since they had launched their business. On this question, nearly three-fifths (59%) of entrepreneurs believe that they became more open to taking risks after launching their businesses. Just less than a fifth (19%), meanwhile, thought that the act of starting and running a business hadn’t made them more open to risk. The mechanism for this is easy to imagine, with the day-to-day ups and downs of being an entrepreneur making them more comfortable with uncertainty. This hypothesis is further supported by the fact that over three times as many entrepreneurs agreed (60%) than disagreed (20%) with the statement that risk-taking is important to their business’ growth.

Fortune favours the bold. To quote Peter Thiel: “In a world that is changing so quickly, the biggest risk you can take is not taking any risk.”⁶  Our results suggest he might be right.