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DEVELOPING NEW BUSINESS IDEAS Level of personal
financial risk

Low High

Low Risk avoiding Risk accepting
Activity seeking Activity seeking

Level of
profit
motive

High Risk avoiding Risk accepting
Profit seeking Profit seeking

Figure 5.6 Identifying your risk comfort zone144

not every entrepreneur shares the same
attitude to risk and return

In the case of Federal Express founder Frederick Smith, his active
service during the Vietnam War contributed significantly to shaping his
attitude to perceiving and accepting risk: ‘I think probably my
experience in the service [made me realize that] the currency of
exchange in FedEx was just money, it wasn’t people’s arms and legs or
lives . . . I was willing to take a chance, because losing wasn’t the worst
thing in the world that could happen to you.’145

What you need to do is to establish where within the grid your personal
preferences place you. You then need to consider the extent to which
the individual business ideas with their varying levels of risk match
your risk comfort zone. If an idea does not match, you should consider
either rejecting the idea or reconfiguring it so that it does match. Where
an idea does match, you can evaluate the degree of the match as either
strong, medium or weak, and carry the score forward into later stages of
the evaluation.