Forfeiting substantial money and time for a new business is a risk that few will take and fewer will do successfully .
Entrepreneurs drive to change their lives by whatever means necessary and in the business world, are the supreme risk takers.
"It takes a certain kind of motivation and a certain type of personality," said Diane Gordon, founder of SEE the Difference Interiors.
Despite the investments, the odds of a new business succeeding barely favor the entrepreneurs.
Just under half of all new businesses fold within five years, according to statistics from the U.S. Small Business Administration.
Whatever money is raised from both investors and the entrepreneur may as well be ash if the business fails. The days, weeks and years can never be regained.
Still, start-up businesses proliferate in the business world.
The prospect of developing and owning your own business is too compelling for entrepreneurs not to tackle the risks, said Judith Cone, vice president with an emphasis on entrepreneurial initiatives at the Ewing Marion Kauffman Foundation. The foundation provides training, mentorship and resources to new business owners.
"Some people have a burning desire to develop ideas that they have fallen in love with," she said. "They have a passion for a product or service."
There are also entrepreneurs driven by an inability to fit in with a typical business structure, according to Cone. These freedom-seekers function best as their own leaders and not following an itinerary set by others.
Dictating the course of the business can hold great appeal and can be likened to the difference between high school and college, according to Mohamad Nahhas, junior international business student at The University of Memphis.
In high school, you cannot devise your own schedule, and instead there is a defined path for four years for eight hours each day, he said.
But being enrolled in college offers flexibility of what subjects to focus on and at what time to take classes, according to him.
Aside from determining their schedules, business owners have creative control.
The greatest lure to open a business is the ability to decide the direction of the business and the elements it features, according to Gordon.
"I wanted to do my own thing," she said.
Still, other founders, known as serial entrepreneurs, salivate at the opportunity to actively participate in growing a business - any business, Cone said.
They do business for business' sake. Some even consider the compulsion to own a business as a personality trait.
"Most folks (who start a business) have that urge to do something, even though they may not know what that is," said Alan Sawyer, counselor at SCORE (Service Core of Retired Executives).
The primary risks for a start-up business are rooted in financial security.
The large amount of capital invested in the business could potentially be lost if there is not enough revenue to cover expenses.
Just to remain viable, many start-up businesses change direction to appeal to the public, according to Cone.
"A new business can morph significantly at least seven times," she said.
The financial risk can be personal for the business owner, as well.
For example, an entrepreneur can be contributing more than 12 hours a day to labor, and there may be no consistent source of a paycheck, according to Cone.
"You're risking stability, a known thing, a salary," she said.
But aside from risking his salary or not generating income, a business owner is also vulnerable to property loss.
Weathers disasters, fires and theft can destroy a business' assets. In fact, theft - especially supplies or office equipment - results in 40 percent of property claims made by small businesses, The Hartford Financial Group showed.
If there is not enough reserve or insurance to replace what was lost, the business may not recover.
Each type of business also holds its own spectrum of potential failure.
Original ideas for products or services can be stolen. Laws may be passed to make the business obsolete. Companies dealing with fashion can be passé by the next season.
"In my line of business, I carry inventory," Gordon said. "It's a larger financial risk than those that provide a service because of the costs of the goods."
There is the risk that she will purchase inventory that doesn't sell, she said.
For whatever reason, many businesses do fail. For every five businesses that opened in 2004, four businesses closed, according to the 2005 report from the U.S. Bureau of the Census.
The magnitude of risk can pressure any entrepreneur, according to Sawyer.
"If you're looking for glory, you're not going to get it when you're starting a business," he said.
Beyond resources, a person's reputation and psyche can be threatened.
The feeling of failure or the constant stress can be overwhelmingly damaging to a person's state of mind or self-confidence, Cone said.
To offset the risks of entrepreneurship, Sawyer recommended researching the multitude of information and assistance available.
Several government agencies and non-profit organizations provide a wealth of resources.
The U.S. Small Business Administration, for instance, is a federally-funded government program with regional and local departments.
In Memphis, there are outlets for the Tennessee Small Business Development Center and the Renaissance Business Center.
It is the availability of these resources that makes the United States ideal for entrepreneurs, according to Nahhas.
"There are more opportunities for a start-up business to succeed," he said.
But if the United States has been the forerunner in entrepreneurship, it may not continue to lead the pack.
"The Chinese are doing a tremendous job of being entrepreneurs," said Larry Campbell, professor of management and information systems at The U of M.
As some developing countries, such as China, move away from communism and into capitalism, there are more opportunities for business creation, he said.
Instead of the government telling them what to produce, people in a free market have choices, not only in what they consume but also in what they produce, according to Campbell.
The importance of small businesses has also increased in European countries. The gap between the number of new businesses in Europe and in the United States has shrunk in the last decade.
By 1998, the number of businesses in Europe was increasing by a rate of about 0.4 percent each year. At the same time, the number of U.S. businesses was increasing by a rate of about 2.7 percent each year, according to a 2003 report from the European Commission's Observatory of European SMEs (small and medium enterprises).
But, by 2001, the average number of businesses introduced in Europe each year grew at a rate of 1.2 percent while the U.S. rate remained the same, the report said.
Ultimately, the risk of founding a business is not deterring entrepreneurs, according to Nahhas.
"It has great responsibility, but it also has great rewards."
