By Daniel Hunter
A study into the psychology and risk behaviours amongst British entrepreneurs has found that they demonstrate a far more prudent and risk-averse attitude than the general public.
The study, carried out by AXA Business Insurance and Psychological Consultancy Limited, in conjunction with the Association of Business Psychologists, found that small business owners were far more likely to maintain wary, prudent and deliberate (calculated) traits than the general population.
Contrary to stereotypical perceptions of entrepreneurs as maverick individuals with an inherent appetite for risk, the analysis found that the majority (52 percent) of respondents fell within one of three risk types: wary (22 percent), prudent (15.2 percent) or deliberate (14.8 percent) — please see appendix for all nine risk types and definitions.
Moreover, the entrepreneurs surveyed showed far less adventurous characteristics (3.6 percent) than the average public (12.8 percent).
Despite the seemingly conservative approach taken by entrepreneurs, the research found that individuals who are more calm, confident, optimistic, organised, methodical and measured have greater financial resources and may, therefore, be more successful small business owners.
Darrell Sansom, Managing Director at AXA Business Insurance commented: “We often think of entrepreneurs as being adventurous renegades, renouncing the more common commercial work environment in search of their own fortunes and in support of their passions. It’s encouraging to see the level of vigilance they employ when compared with the broader population, as from our experience, those businesses featuring more diligent management teams have traditionally been more successful in the longer term.”
The business owners surveyed represented limited companies, sole traders and partnerships. Those involved in partnerships were more likely to be wary, prudent and composed, when compared to their entrepreneur peers; whereas sole traders demonstrated more carefree, intense and spontaneous qualities, suggesting the nature of their roles allows for more flexibility in their decision-making. Those representing limited companies showed a proportionate balance across wary, prudent and deliberate risk types.
Sansom continued: “Although demonstrating a contradiction to general perceptions around ‘what makes an entrepreneur’, we welcome the fact that business owners are more measured and calculated in their approach. Any business, regardless of sector or the level of experience running it, would be unsustainable without its leaders having clear goals and ambitions, and a practical roadmap, grounded in reality, to achieving these.”
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