The Psychology of Fear in Entrepreneurship

What began as a side hustle in 2017, turned into a full-time pursuit for Koval in January 2020. The plan was for Amanda to continue working at her outside job. But a few months after taking that route, “the world fell into a volcano” with COVID-19. The pandemic cost Amanda her job.

“The two of us had no other income. It was terrifying.” Koval remembers. Koval is not alone. Embarking on an entrepreneurial venture is a voyage into dark and uncharted waters for many (if not most) people. Humans are hard-wired to feel stress, anxiety and apprehension in uncertain conditions, experts say. We fear the Unknown.

“Looking for security and certainty is human. Our brains evolved to protect us and keep us safe. Therefore, it’s normal for entrepreneurs to feel a certain degree of fear,” explains Irina Cozma in an email discussion. Cozma works as a career and executive coach with Irina Cozma Consulting LLC in Charlotte, North Carolina, and holds a doctorate in organizational psychology. 

Mary Barrett, a professor of management and co-editor of the recently published Women in Family Business: New Perspectives, Contexts and Roles, agrees. Entrepreneurship “has a scary element baked into it,” she notes.

“After all, as economics textbooks tell us, it’s about managing risk and the

unknown (both financial and personal unknowns), and those things are inherently scary. Human beings like to be in control and risk and the unknown are by definition not easy to control,” says Barrett. But people are not a monolith. Humans exist on a continuum of the tolerance for risk and uncertainty. Some people can appear almost fearless while others crave safety and security. Often those people who appear most intrepid have had significant experiences with failure. They have learned to pick themselves up and start again, experts say.

“Each of us is a mix of personality traits, complicated upbringing, current socio-economic status, and so on,” Cozma writes. “All this makes some people able to handle risk and stress better than others.” 

Consider the late Wilbert “Bill” Gore, founder of W.L.Gore & Associates Inc.

Gore was 46 when he left a very secure job  after 17 years at the

DuPont Co. as a senior research chemist to start his own business. W.L.Gore & Associates Inc. in Newark, Delaware is known for its waterproof, breathable Gore-Tex fabric, but it also makes a wide array of other products, including implantable medical devices,sewing thread for outdoor products and sealants, to name just a few.

At the time of the company’s founding in 1958, Gore and his wife, Genevieve, had five school-age children, the oldest a sophomore in college. The Gores tapped into their savings to start the business on their 23rd wedding anniversary.

“He was the supreme optimist,” said Gore’s oldest son, the late Robert “Bob” Gore, in a 1996 interview with The News Journal in New Castle, Delaware. “He had a lot of faith in good things happening.”

Bob Gore said he and his siblings never felt in jeopardy.

“The only time I thought anything about it was when their friends would say, ‘You’re leaving DuPont?’ But being with him, it seemed normal,” Gore said in 1996.

Dr. Carlos Garcia, a clinical psychologist and owner of Tampa Counseling and Wellness in Tampa, Florida, says such childhood experiences as Bob Gore enjoyed can be a major influence on a person's comfort with risk as an adult.

“Imagine growing up with that being modeled for you,” marvels Garcia of Gore’s experience with his entrepreneurial father.

By contrast, other successful entrepreneurs can be quite risk averse based on their childhood history. Douglas D. Box, author of “Texas Patriarch”, a Legacy Lost, remembers his larger-than-life entrepreneurial father, Cloyce Box, as anything but reckless. Cloyce Box, who had construction, cement and oil businesses in Texas, “worried about things,” his son recalls. Abandoned at 12 years old by his father, Cloyce Box faced considerable hardship growing up on a farm in Central Texas, his son explains.

“I think having grown up in the Depression, he was always pretty cautious.

He wasn’t reckless. He was well aware of what the risk was,” Doug Box says. “But he was fearless in his determination.”

When Doug Box had his own consulting business in Dallas, Texas, he admits he was “pretty fearful the whole time.”

“I didn’t feel like I had any safety net,” Box remembers.

Indeed, one study–The Myth of the Risk-Tolerant Entrepreneur by Hongwei Xu and Martin Ruef–found entrepreneurs are much more risk averse than the general population. The results of the study suggest that many of the motivations individuals have for starting a business are not related to money. The researchers say entrepreneurs view autonomy and identity fulfillment “as being significantly more important than pecuniary benefits.”

Susan Walton struck out on her own in 2013 with an antiques and resale business in Bellefonte, Delaware, after being laid off from a communications job at a private school. Having been raised by an entrepreneurial father–who did everything from run a bakery to operate a café -- Walton felt she had the life experience to handle the “highs and lows” of being her own boss.

“It was never really about money, but making a living and doing something I loved,” Walton says of starting Bellefonte Vintage LLC. “It can’t be about the money.”

While most people think the main stumbling block in embarking on an entrepreneurial venture revolves around the fear of going broke, there are other anxieties that lurk alongside the fear of not being able to pay the bills.

Many entrepreneurs suffer from “imposter syndrome,” a feeling rooted in self-doubt about their abilities and accomplishments, according to clinical psychologist Garcia. With imposter syndrome, a person feels like they’re a charlatan who is masking their incompetence.

“They have feelings of ‘They’re going find out that I’m a fraud, I’m a phony,’’’ says Garcia, who coaches entrepreneurs and business owners.

Another common worry is: “I don’t know what to do,” explains Neil Kane, an assistant teaching professor and director of curriculum and Capstone Advising in the ESTEEM Program at the University of Notre Dame. Koval of Accidentally Wes Anderson admits he sometimes felt that way until he learned that “everyone is figuring it out along the way.”

Many entrepreneurs also suffer from the fear of being judged by others if they should fail. No one wants to be labeled a “Failure.”

“It has a lot to do with feelings of shame,” Garcia explains. “We’re wired as human beings to have that emotion. Very early on, most of us develop feelings of shame or guilt when making mistakes. We become afraid to make mistakes.”

And the fear of failing at a business that results bankruptcy or loss of a home can be nightmarish. People worry that if their business should fail their social status in the community will plummet, not only for themselves but for their families. They worry about a devastating hit to their self-esteem.

“It’s embarrassing,” for people if a business fails, Kane says. “It makes you question whether you’re employable. What do I tell people at Christmas dinner?”

Entrepreneurs also worry about the welfare of their employees, according to Kane. Most feel responsible for the people they recruit for their venture.

But fear can also motivate an entrepreneur, according to research by James Hayton and Gabriella Cacciotti, as detailed in the Harvard Business Review.

“Fear can inhibit and motivate,” they write.

Worries related to personal financial security, opportunity costs or the ability to get the money for the enterprise were positively associated with an entrepreneur’s persistence in chasing their goals, say Hayton and Cacciotti in “How Fear Helps (and Hurts) Entrepreneurs” in the “Harvard Business Review”.

On the other hand, entrepreneurs with fears about the viability of their idea or their personal ability to build a successful business tended to become “less proactive,”according to the paper. Fear of failure can also sabotage goal setting with entrepreneurs aiming for easily reachable targets or the opposite, unattainable objectives, the researchers write.

“A certain amount of stress and impostor syndrome can be useful, as long as it’s not paralyzing,” Cozma notes. “A constructive amount of stress can push a person to learn and keep doing better and move forward toward their goals.”

No matter what the worries or anxieties entrepreneurd face, they don’t have to be controlled by them, experts say. They offer these nuggets of advice.