Entrepreneurs are well known for being fearless, independent risk takers. However, in reality, many entrepreneurs find themselves facing personal challenges that can be overwhelming. In fact, San Francisco researcher Michael A. Freeman, who is conducting an analysis at The Entrepreneurship Center at the University of California, San Francisco, reports a higher rate of mental health conditions like depression among entrepreneurs compared to the general population.
The personal challenges facing entrepreneurs can range from protecting their own finances as they build their startups to finding the peer support they need to make it through the inevitable difficulties they face. What can entrepreneurs do to maintain their sanity as they build their startup's success?
Experts weigh in on three key ways:
• Take Care of Your Personal Finances: It can be tempting for an entrepreneur to keep all assets tied up in the business. While in the early days this approach may be necessary, it is high risk and can yield high levels of stress over time. As soon as they are able, entrepreneurs should take care of their personal finances by diversifying their asset allocation.
Michael Svec, a Senior Vice President and Financial Advisor at Morgan Stanley's K Street office in Washington, DC, calls asset allocation "the key to successful long-term investing." Svec notes, "Investing in different classes can help manage risk and may reduce volatility. This helps you avoid making bad short-term decisions that can occur when you have a concentrated portfolio."
By finding a financial advisor they trust and who can help them to diversify and allocate assets appropriately, entrepreneurs will have greater confidence in the state of their personal finances, which will go a long way to reducing stress.
• Invest in Peace of Mind: Injury, death and lawsuits -- a few of the less obvious risks entrepreneurs face -- can lead to many sleepless nights. One way to guard against the stress of these catastrophic risks is to have proper insurance.
Paul Weinberg, an independent risk-management professional based in the Washington, DC area, underscores the importance of giving thought to "protecting what you have created, as well as how best to protect your family." Fortunately, notes Weinberg, "just like the startup environment, the insurance industry offers a wide variety of products to address different challenges. Insurance can be used not just to mitigate obvious risks, but support tax-management and other business planning strategies, as well."
Begin by getting a referral to a great insurance professional from another entrepreneur. Don't have a great network to rely upon for referrals and advice? Read on.
• Seek Peer Support: The entrepreneurial journey can be exciting and rewarding -- but also potentially lonely. Amy Gleklen, a Chair with Vistage, a peer advisory organization, advises entrepreneurs to "take advantage of joining a peer advisory group and learning from others who have been there or are there. There are so many benefits to surrounding yourself with like-minded folks."
Peer support will go a long way to letting entrepreneurs know they are not alone, and provide a great resource to which they can turn during difficult moments.
The Bottom Line
Being an entrepreneur is full of risks -- not the least of which is the risks to the entrepreneur's own well being. These three steps are simple ways to mitigate some of those personal risks and increase your peace of mind as you work to find startup success.