You probably intuitively know this but studies have proven it as well – our willingness to take risks declines with age. A banker we know says that the difference between junior lenders and senior lenders is …
Junior lenders want as high a lending authority as possible because that shows confidence in their abilities. Senior lenders want as low a lending authority as possible because that gives them cover!
Entrepreneurs are hot about hot decisions
Scientists at the University of Cambridge recently released a study on “cold” and “hot” decisions by two groups – managers and entrepreneurs. By their definition, “cold” decisions involve little emotional involvement whereas “hot” decisions involved taking risk. The outcome of these hot decisions is unknown in advance; it could go either way – good or bad.
Both the managers and the entrepreneurs in the study were about 50 years old, on average. The researchers found that the managers took risks consistent with their age.
accepted risk – like someone twenty years younger.
So we can only conclude that entrepreneurship is the fountain of youth. By taking risks, we act younger than we are!
I thought taking risk was the cause of some of the gray hairs I have to cover!
And I thought it was the reason I have a lot less hair than I used to!
We know that, right now, a lot of us aren’t in a risk-taking mood. But if the past is any indicator, it will be risk-taking entrepreneurs that turn our economy around and start creating jobs.
Risk-taking can be learned
This study also showed that risk-taking can be learned. So you can tap into the fountain of youth by learning how entrepreneurs are able to manage the risk they take.
Contrary to popular belief, entrepreneurs aren’t risk lovers. They are willing to accept moderate risks, in general. However, as we see again in this study, they’re more willing to accept risk than the general population. We can think of four reasons why they do this:
Entrepreneurs may read the situation differently.
They often have insights that people on the outside don’t have so they’re able to interpret the situation differently. We may look at a situation and see a lot of risk. The entrepreneur knows it’s much less risky because of his or her unique knowledge.
Entrepreneurs aren’t paralyzed by risk.
Many people are willing to do everything right up to the point of taking action. They develop analysis paralysis and never pull the trigger. Entrepreneurs analyze to a point, but then they just go.
Entrepreneurs are often able to shift a portion of the risk to others.
It could be the firm’s employees, customers, vendors, or financiers. As entrepreneurs get others to buy in, no matter what the form, the level of risk they are taking goes down to a manageable level. Then they know they can act.
Entrepreneurs are able to handle and live with “entrepreneurial terror.”
They can handle the stress that comes along with the risk. They are able to ride the ups and downs of the entrepreneurial roller coaster ride.
So what we learned today is that entrepreneurs don’t act their age. And that’s one of the secrets to their bigg success!
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Thank you so much for reading our post today. Join us next time when we talk about another study that shows that a happy friend is worth $20,000 in the bank! Until then, here’s to your bigg success!
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(Image by Kreon)