A new study into the entrepreneurial behaviour has found that many entrepreneurs are more prudent, and take fewer risks than the general public.
The research, carried out on behalf of AXA, suggests that far from having an insatiable appetite for risk, most entrepreneurs in the study were either ‘wary’ (22%), ‘prudent’ (15.2%), or ‘deliberate’ (14.8%). We describe what these definitions mean later in the article.
In fact, the most successful business people were likely to have personality traits that many would not associate with entrepreneurs – such as being calm, methodical and measured.
Darrell Sansom from the business insurer said: “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.”
According to the research, which was carried out by Psychological Consultancy Limited, in conjunction with the Association of Business Psychologists, there are nine main ‘risk types’ for entrepreneurs:
Entrepreneurial risk types
SPONTANEOUS (7.2% of respondents / 11.7% of general population) – impulsive and attracted to risk, but distressed if things go wrong. They are emotional and react strongly to disappointment. They may enjoy the spontaneity of making unplanned decisions but may not be exhaustive about gathering information and may miss important details.
INTENSE (11.6%/ 10%) – anxious and emotive. They invest passionately in people and projects but, haunted by the fear of disappointment, this may become a self-fulfilling prophecy. They feel things deeply and take it personally if these don’t work out. Self-doubt makes them their own most unforgiving critic but it also fuels their drive and determination to succeed.
WARY (22% / 11.3%) – Anxious about risk but well organised, this Risk Type put security high on their agenda. Vigilant in identifying risk before appreciating potential benefits, they fear that however well it worked for others, things may go wrong for them. Sensitive about uncertainty they are zealous about security and fervently seek to control people and events.
PRUDENT (15.2% / 10.1%) – systematic, and conforming. Conservative and conventional, they prefer routine to variety, like operating within familiar procedures and prefer change to be gradual and evolutionary. Generally cautious about new ventures, they find reassurance in sticking to what they know.
DELIBERATE (14.8% / 12.6%) – calm, self-confident and experience little anxiety. Any lack of risk awareness is balanced by a desire to do things in a planned and systematic way. Being self-controlled, compliant and usually fully informed, they are unlikely to walk into anything unprepared.
COMPOSED (7.2% / 11.1%) – composed and self-confident. Cool-headed, calm and unemotional, their outlook will always be optimistic and untroubled. These people take everything in their stride, seem quite imperturbable and appear to manage stress very well.
ADVENTUROUS (3.6% / 12.8%) – impulsive but fearless. They combine a deeply constitutional calmness with impulsiveness and a disregard for custom, tradition or convention. They are imperturbable and seemingly oblivious to risk.
CAREFREE (8.4% / 9.8%) – daring, prepared to challenge convention and to make decisions ‘on the fly’. They enjoy challenges in fast moving situations but are impatient with repetitive tasks or working to prescribed routines. Conceptually innovative and distractible, they are not great with details.
TYPICAL (10% / 10.6%) – the most distinctive feature of the Typical group is that they show none of the extremes that characterise other types. So far as personality and risk tolerance are concerned, they are unexceptional, predictable and similar to most other people. They will not be exceptionally prudent or unusually reckless, neither will they be particularly emotional or extremely calm. Any more pronounced risk taking behaviour is likely to be due to attitudes developed towards particular types of risk resulting from specific experiences.