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Entrepreneurs and risk tolerance: Ingrained or learned?

Startup survivors reflect on fears and risks

Mike Taylor //June 23, 2017//

Entrepreneurs and risk tolerance: Ingrained or learned?

Startup survivors reflect on fears and risks

Mike Taylor //June 23, 2017//

About 80 percent of new businesses survive past their first year, but about half of all new businesses cease operations within five years, and only one-third make it past 10 years. Those survival rates have changed little in the past two decades, and economic downturns have little impact on these statistics, according to the U.S. Small Business Administration.


So what makes entrepreneurs do it? We put that question to some past Colorado Companies to Watch winners. Specifically, we asked: How do you define risk, and, how were you able to overcome the typical aversion to risk – or summon enough risk tolerance – to launch your own business?


Defining Risk

We found entrepreneurs define and embrace risk differently.  Should you have a "plan B" in case your company fails?  Is succeeding in business a game of chance or a result of careful planning?  Four successful Colorado executives share their insights and how risk has impacted their companies:




Risk tolerance: Is it in our DNA or can it be learned?

We were also curious: Are entrepreneurs born with a greater tolerance to risk, or, can it be developed?  And how did you know you were cut out to be a business owner?


Jeff Cleary, founder, Grateful Bread Co.

Jeff Cleary founded Golden-based Grateful Bread Co. in 2005, but he was an entrepreneur long before that. He started his first business, Cleary’s Bakery and Catering, as a 15-year-old in the 1980s. Years later, he owned popular restaurants in Denver known for their in-house bakeries. From that emerged Grateful Bread, a 2015 Colorado Companies to Watch winner.


“I tell people I haven’t had a real job since 1996. I’ve been pretty much self-employed my whole life. I owned my first bakery in the ‘80s, and then I worked for people briefly in the late ‘80s and early ‘90s. Then I basically went back to working for myself. I always knew there was risk working for yourself. The problem is, I’m not really employable. I always seem to do the best when I do whatever I want, vs. working for other people.


“I’ve owned restaurants, other bakeries and consulting companies. And Grateful Bread was one of those things that kind of came out of the ashes. After Sept. 11 (2001), my businesses pretty much got murdered. They limped along for another few years, and I sold everything off by 2005. Part of one of the deals was that I took the baking equipment with me, and I started Grateful Bread. Both of my restaurants had a wholesale bakery, and eventually that worked into Grateful Bread.


“Growing up, I started working for myself pretty early. I tell people the worst day of my life would be to have to think about getting a job. Like I said, it seems like I’ve always done best when I just do what I want to do. That’s kind of where Grateful Bread came from.


“I always knew I was going to work for myself. I only ever had a real job from when I was 19 years old to about 25. I’m almost 50, and I’ve been working for myself ever since. I have friends who are risk-averse and people who have started stuff. But the risks come with rewards. When you take the risk, no matter how long it takes, if you keep going and chugging along, it usually always pays off.


“And failure is part of many successful entrepreneurs. Failure teaches you a lot. It can open your eyes to what you have done and how you got there; it also can create a new beginning, if you're able to see it that way. I guess it’s how you look at it.”


Dan Abrams, co-founder, Flylow Gear


Dan Abrams founded Flylow Gear in 2005 with business partner Greg Steen, and they debuted their ski wear in 2005. Abrams, 39, now lives in Lake Tahoe, Calif., but he still visits Denver at least once a month where Flylow Gear, a 2015 Colorado Companies to Watch winner, remains headquartered.   


“I think there definitely is something about the DNA of an entrepreneur. It’s someone who is interested in weighing the risk-reward and looking at a challenge. I looked at what it was going to cost me to get my first (Flylow Gear) production run. And I said to myself, ‘All right, I’ve got a side job. I’m bartending. Even if everything goes bad, I can pay that off in five years.’ But I was like 25 when I was getting started, and I didn’t have much to lose. So ignorance was bliss, maybe.


“And this was back 2004-2005. It was before the credit crunch, and they were giving away credit; they were giving away cheap money. And it’s not like I was rolling the dice with a family.


“I didn’t take a salary or get paid from Flylow until Sept. 1 of 2010. And I didn’t quit bartending until Aug. 27, 2010. I’ll never forget those dates. It was a long fight — re-investing everything. But there were perks. I’m in the ski industry, so the first thing, rather than getting paid – and I would have spent the money on skiing anyway – I just started sending myself on marketing trips around the world to go skiing. But I think that’s a huge turning point when you start to become self-supportive. Your company has grown to the point that not only can it afford itself, it can afford growth, and then it can afford to pay your salary AND the growth that’s going with it. That’s pretty huge.


“Every conversation you get into regarding your business, you’re going to get something out of it. Bartending was really good for that. I met a lot of people there. But I also taught waterskiing for eight years at a place called Soda Lake Water Ski School. My boss was Chuck Blood. He gave me a job driving boats. He was the DECA (entrepreneurship program) teacher at Cherry Creek High School, and along the way had met all these different businesspeople. He ended up making all these introductions for me to multiple people in and outside of the ski industry who were integral to my business.”


John and Janey Hubschman, founders, Epicurean Butter Co.


John Hubschman had a long history as a fine-dining chef, and wife Janey Hubschman had vast experience in food-related sales and marketing, but they had always worked for other people before they launched Epicurean Butter Co. in 2004. Based in metro Denver’s Federal Heights, Epicurean Butter is sold in all 50 states and was a 2016 Colorado Companies to Watch winner.  The company offers 13 flavors of finishing butter to retailers, and custom-blends for many restaurant chains, grocery chains and other customers. Janey Hubschman points out that their path to entrepreneurship was different than many, or at least longer delayed, as they were in their 50s when they took the leap. That made taking a risk easier in some respects, harder in others, she says.


“Our kids were supporting themselves (when we started Epicurean), so in that way we didn’t have other financial dependents, so that made it easy. The way that it’s not so easy is that now we’re 13 years in, and most people are thinking about retiring and we’re still at it full-force. It makes it a little more critical that we make good decisions and that things work out. Because if they don’t, then you have a lot more to lose. We have a lot of friends who are in their late 20s and 30s starting food businesses, and truthfully, if it doesn’t work out for them, they’ve got plenty of time to try something else.


“It is very satisfying (to see an Epicurean Butter label at the store), and especially when it’s someplace like Safeway. They’re putting our little 1 ounce squeeze packs of butter in with cut vegetables, and it is a huge display, well-lit in the produce department. We still get chills. It’s really exciting. So that’s part of what is satisfying, but also having a phone conversation with somebody and being able to turn around samples in two days, and just being able to provide a service that we know nobody else can do. John’s culinary skills are something that a lot of other companies don’t have, so I think it just makes us feel really good that we know we’re doing something no one else can.” 


Special thanks to our Colorado Companies to Watch video participants:

Stephanie Carter, Wallaroo Hat Company
William and Susan Frew, Sunshine Plumbing, Heating & Air
Paul Berberian, Sphero