Thus, there are both rational and irrational sources of fear about the financial status of a closely held enterprise, as well as fear about making the wrong decision. These organizations are, in fact, often under-capitalized, yet as the behavioral economists point out the fears frequently extend beyond the legitimate concerns. In the most effectively run enterprises, there is a high level of patience on the part of the entrepreneur regarding long-term financial goals and an enduring commitment to achieving these goals. However, there is also an accompanying low level of financial stability in many of these enterprises—which makes the long term strategizing particularly difficult. The dominant desire to avoid regret and loss makes long term strategizing even more challenging.
At the heart of the entrepreneurial challenge associated with this issue is the capacity (and willingness) of the entrepreneur to live with financial insecurity and hold the desire to avoid regret at bay. When asked what she does as an organizational coach, a colleague of ours who works primarily with professional entrepreneurs indicates that she helps people work on the problems that “wake them up at 3 o’clock in the morning.” These “wake-up” problems are often both financial and emotional in nature for the professional entrepreneur in a closely held enterprise. The coach is there is help her entrepreneurial client differentiate between the realistic and unrealistic fears and between those financial matters that are in their hands (internal locus of control) and those that are out of their hands (external local of control).
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