Are entrepreneurs financial risk-takers? Conventional wisdom says yes, but a recent research report from the Kauffman Foundation, Business Owners, Financial Risk, and Wealth, suggests otherwise.
Author Tami Gurley-Calvez studied 1989 to 2007 data from the Federal Reserve Board, Survey of Consumer Finances (SCF) to research three questions:
1.) Are business owners generally more or less financially conservative than their non-business-owning counterparts?
2.) Do business owners accumulate more wealth?
3.) Do business owners hold a smaller share of their financial assets in risky stock holdings?
While entrepreneurs are typically portrayed as financial risk-takers, Gurley-Calvez found that when it comes to saving and borrowing, they are actually more conservative than non-business owners. For instance, 45 percent of business owners said it was important to them to save for retirement; just 32 percent of non-business owners said the same. In addition, business owners were focused on saving for the long term; they were more likely than non-business owners to say their savings horizon was five or more years in the future.
Finally, whether investing, saving or borrowing, business owners were more thorough than non-business owners in investigating their financial options. Ninety-one percent said they spent a “moderate” amount of time or more shopping for the best investment or borrowing terms; just 82 percent of non-business owners said the same.
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