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The Actuary The magazine of the Institute & Faculty of Actuaries

A simple question of flowers and risk

Student editor Jason Whalley on how to best nurture and grow your own company

The pioneers of the future commercial environment are among us right now

Lily and Poppy want to open a flower shop. They have conducted an initial appraisal and have concluded that this project is viable…”

The writers of the CA1 examinations should be commended for their imaginative applications – even if such foundations are to be taken with a pinch of salt. The above premise is an excerpt from the CA1 April 2016 paper. So, in an excuse to think about anything other than acronyms, I asked myself a deceptively basic question: ‘Could I start my own company?’

A simple question with a complicated answer. In fact, each answer only serves to prompt more questions. 

Yes! I can and will start my own company today. After all, I do my job well enough, and look how high my charge-out rate is; I could make that seven hours a day and five days a week. So what would my company be about? Is there a gap in the market that I, with my enviable skillset, could exploit?

But how would I even get started? Could I do it by myself? I might need help… as the self-doubt and pessimism begins to seep in, that happy-go-lucky surge of enthusiasm is quickly quelled and – soon enough – that yes becomes: ‘No. Of course not’. 

Ultimately, it all boils down to the same bottom line; what can I do well enough that people will want to pay me money for? Unfortunately for me, the answer as of right now is nothing. 

Poppy and Lily, on the other hand, presumably possess unrivalled prowess in horticulture, serving to plant the seeds for success in their flower shop endeavour. 

For the sake of argument, if I were to acquire a green thumb, would this enable me to open my own flower shop? 

The fact of the matter is that there are just so many more aspects of setting up a new business that need to be considered; ranging from financial awareness, to sourcing the capital and key supplier relationships, to effective sales tactics. 

The pensions industry is arguably more heavily regulated than other business lines, in which high-tier and widely recognised qualifications are required in order to operate and be taken seriously. In reality, my three years of experience in pensions are but a drop in the ocean when stacking up against the competition. 

The similarities in business operations from company to company infers that there simply must be some kind of remedy for success. In my case, I strongly feel that a balance of experience and an insatiable hunger will continue to illuminate the path forward – it is then that I will be able to instigate a change in trajectory and diverge to a different path, should I choose to.

I would argue that the single most important factor – the one that prevents the yes from turning into a no, the one that allows the innovative to soar – is risk appetite. Since most actuaries are typically risk-averse, on most occasions the brakes may be slammed down before the journey has even started. 

Given my incessant referrals to risk management, I now feel compelled to set out a disclaimer that this article is not an advertisement for sitting the CA1 Risk Management examination.

I would wager that most people have, at some point, entertained the question of starting a business by themselves. It can be all well and good scoring 11 out of 12 on a theoretical exam question, but when it comes to the real world, that sense of security and stability accompanying a conventional job serves a much more appealing dish than the dreaded consequences of a failed business. 

However, there are opportunities to exploit. Connections to be made. Rewards to be reaped.

Those who are brave and can stand firm in the face of adversity possess a recipe for grandeur in the ever-changing business world. 

The pioneers of the future commercial environment are among us right now. They may be unrecognisable to most of us, and it will only be when they take a leap of faith that they can truly ascend.

Jason Whalley is joint student editor