Entrepreneurship has always required optimism. But according to a new research report from ERGO NEXT Insurance, that optimism often co-exists with real anxiety. One-third of small business owners worry every week that they could be forced to close, yet half are confident they’ll still be in business five years from now. The findings reveal the emotional reality of running a small business—balancing uncertainty, financial pressure, and unexpected risks while continuing to believe the rewards outweigh the challenges.
These findings reminded me of Charles Dickens’ famous opening line in A Tale of Two Cities, “It was the best of times, it was the worst of times.” For many entrepreneurs, both are true simultaneously. While they regularly confront economic uncertainty, cyber threats, and operational risks, they remain remarkably optimistic about the future of their businesses.
The First-Year Danger Zone
The first year of operating a business is often the most precarious: 58% of new entrepreneurs say their businesses have felt at risk of failure during their first 12 months in business. Only 23% say they’ve never felt at risk.
These fears are not fleeting—33% worry about unexpected issues and risk of closure at least once a week. For entrepreneurs in business for less than one year, that number jumps to 44%. Among more established business owners (in business one to five years), 22% were similarly concerned.
New small business owners’ sense of vulnerability carries over into their outlook for the future, and they have a more cautious outlook than more established business owners:
- 80% of new business owners expect business risks to increase over the next one to two years, compared with 53% of established business owners.
- 78% of new business owners feel their business is more exposed to challenges today than when they first launched, versus 49% of established owners.
Top Risk Concerns for Small Business Owners
The report shows that small business owners are most focused on the risks that could put their profitability and reputation at stake: 46% of all entrepreneurs cite an economic downturn or inflation as top concerns. When margins are already tight, even small shifts in cost or demand can be destabilizing.
Day-to-day operations bring additional concerns. More small businesses now operate in a digital-first environment, adding risk exposure, including:
- Cyberattack or data breach (27%)
- Making a mistake that costs a client money (25%)
- Issues with contracts, licenses, or regulatory requirements (24%)
The Emotional Toll and Enduring Optimism of Entrepreneurship
Most entrepreneurs understand that running a business is risky. But living with that pressure every day can take a significant emotional toll:
- 40% of all entrepreneurs were surprised by the number of business risks they weren’t aware of when they started their companies
- 27% didn’t expect worrying about business risks would be so emotionally draining
Fortunately, the emotional burden of risk often becomes more manageable as businesses mature: 72% of new entrepreneurs say expanding their businesses has made them feel more vulnerable to risk, but only 44% of established business owners feel that way, suggesting, according to the survey, that confidence and stability often strengthen with experience.
Believing In The Future
The survey points out that the data consistently shows that “Economic and business challenges have not diminished the entrepreneurial spirit. Even as many business owners regularly worry about keeping their doors open, they still believe the rewards of entrepreneurship outweigh the obstacles.”
And protecting their businesses against potential and actual setbacks gives them confidence to take more calculated risks.
Photo courtesy Getty Images for Unsplash+