Risk vs. Reward

Since I’m a business student, I have been drilled with the concept of thinking in terms of risk and reward the past few years.  For every action, there is a certain level of risk and a certain level of reward.  The basic goal is to maximize your reward while minimizing your risk.  This is obviously easier said than done.

Being a senior graduating in December, I have SEVERAL decisions looming in the next couple of months.  One of the most prevalent is what I’m going to do for a living.  I never really thought the decision would get as complex as it seems its going to prove to be.  Often times, you don’t know if you’ve made the right decision until well after you’ve made it which is what makes the decision so pivotal.

When faced with these decisions, I often go back to my risk vs. reward formula.  Unfortunately, there is no clear cut winner in this one. Let me set the scene for you.

On the one hand, I have two positions awaiting me in my home town.  They would both pay well (nothing outlandish, but definitely enough to live fairly comfortably and be able to slowly pay off the good ole’ student loans), both are in an area I know very well, and I know people who work at both companies so getting broken into the environment would be good.  On the downside, I’m not crazy about going back home to work and there doesn’t seem to be entirely too much opportunity to move up the corporate ladder.  Both positions would fall under my category of “low-risk, moderate reward”

On the other hand, I have an opportunity to start a business with a friend.  We’ve done a good deal of research and I really believe that the business would be successful.  However, while we have done a great deal of work trying to forecast how the business will do, we won’t actually know until we get it underway.  In this scenario, I would make little money starting out, but great potential to increase my income as the company thrives.  I would get to work with one of my best friends, have a great deal of influence in the company and it would bring about much more self-satisfaction if it is successful.  The downside to this is obvious.  We start the business and are confronted with a couple of obstacles we didn’t foresee and the company fails.  If that happens, I will have likely missed out on the two other positions and be down a bit of money.  I categorize this option as “high risk-very high reward”. 

Now that you have an idea of my quandry, I ask for your thoughts and opinions? What would you do?

-JG