Contrary to stereotypical perceptions of entrepreneurs as risk-taking mavericks, they are, in fact, more prudent and risk-averse than the general public. That’s the conclusion of research commissioned by Enterprise Nation partner AXA Business Insurance.
The study*, carried out with the Association of Business Psychologists, found that the majority (52 per cent) of small-business owners questioned fell within one of three risk types: wary (22 per cent), prudent (15.2 per cent) or deliberate (14.8 per cent). And the entrepreneurs surveyed showed far less adventurous characteristics (3.6 percent) than the average member of the public (12.8 percent).
The 250 business owners surveyed represented limited companies, sole traders and partnerships. It seems that business owners working alone are more carefree, intense and spontaneous than those working in partnerships, making them more flexible in their decision-making. By contrast, those working in partnerships are more likely to be wary, prudent and composed.
Despite the seemingly conservative approach taken by entrepreneurs, the research found that people who are calm, confident, optimistic, organised, methodical and measured have greater financial resources and may, therefore, make more successful small-business owners.
The types of entrepreneur
SPONTANEOUS (7.2 per cent of respondents/11.7 percent of general population): Impulsive and attracted to risk, but distressed if things go wrong. They are emotional and react strongly to disappointment.
INTENSE (11.6 per cent of respondents/10 per cent of general population): Anxious and emotive. They invest passionately in people and projects but, haunted by the fear of disappointment, this may become a self-fulfilling prophecy.
WARY (22 per cent of respondents/11.3 per cent of general population): Anxious about risk but well organised, this risk type puts 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.
PRUDENT (15.2 per cent of respondents/10.1 per cent of general population): 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 per cent of respondents/12.6 per cent of general population): Calm and self-confident, they experience little anxiety. Any lack of risk awareness is balanced by a desire to do things in a planned and systematic way.
COMPOSED (7.2 per cent of respondents/11.1 per cent of general population): 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 per cent of respondents/12.8 per cent of general population): 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 per cent of respondents/9.8 per cent of general population): 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 per cent of respondents/10.6 per cent of general population): They show none of the extremes that characterise other types. They are unexceptional, predictable and similar to most other people. They base their attitude towards risk firmly on their own specific experiences.
* The survey of 250 UK business owners represented business owners from limited companies, partnerships or sole traders, across a broad range of sectors throughout the UK. Respondents were aged 18 and over, though the majority (more than three-quarters) were aged between 31 and 60 years. A general population sample of 2,000 individuals was also used to compare the results.
Photo credit: Rob Young
What kind of entrepreneur are you?
Do you identify with the entrepreneurial types identified by AXA? What do you think of the conclusion that business-owners working alone are more carefree and spontaneous than those working alongside others? Does that chime with your experience? Let us know your thoughts below!
AXA Business Insurance is an Enterprise Nation partner.