Following up on yesterday's post about how entrepreneurs approach risk, I spoke with Steve King today about two different types of small business owners with different risk profiles.

On one side are conventional small businesses, which are risk-averse. The owner's personal wealth is tied up in the business. It's probably her most valuable asset (or second to her home) and she's faces big downside risk if the business fails.

On the other side are investor-backed start-ups -- companies aiming for high growth and playing with other people's money. This is key. Once entrepreneurs sell a significant amount of equity to venture capitalists or angels, the investors have taken on a lot of the downside risk. The VC model lets start-ups swing for the fences, with the understanding that a lot of times they'll strike out, but that won't leave the founder flat broke. Entrepreneurs can even benefit financially if the venture fails. "A lot of people have gotten rich building businesses that failed," King says.

But I'm also interested in the people in between: Entrepreneurs bootstrapping growth ventures on their own dime. They're often risking their personal wealth like Main Street small business owners to try to build Silicon Valley-style enterprises that scale. "Those people tend to fall into the more traditional small business risk profile, because they are putting their money on the line," King says.

Jonathan Fields also brings up a good point in the comments on yesterday's post: Small businesses are learning how to scale with minimal risk.

Some models require substantial investment of money and ramping up of overhead and complexity. More and more, though, freelancers and small businesses are discovering ways to scale that reduces risk and complexity by commoditizing and distributing knowledge.

Examples include copywriters and marketers who develop niche specific campaigns, test them, then license their use, instead of selling it one time. Or designers who create and distribute DIY branding information for small businesses.

SO, I agree, the massive scale homeruns tend to require more cowboy-oriented risk, but increasingly, most small business people can scale to a very satisfying level without the exposure and complexity that was required just a few years ago.

This goes back to the earlier discussion of microenterprise as a safety net. It's possible to support yourself and grow at a respectable rate (if not a "home-run" pace) without taking on the kind of financial risk that investor-backed companies do.

I also love this anecdote from Barbara Winter:

I once got a call from an investment broker. When I told him my primary investment was my own business, he sounded shocked and said, "Isn't that risky?" I replied, "Not as risky as giving my money to a stranger over the phone." What others perceive as risk doesn't feel like it to people who understand creative problem-solving and are flexible and willing to change as situations warrant. And small businesses can adjust more quickly than big dinosaur organizations.

Please keep the stories coming. How much of your personal wealth do you risk in your business? How do you minimize risk in your venture? For entrepreneurs who both bootstrapped and raised money, do you approach risk differently in an investor-backed company? Has your approach to business risk changed in this recession?

As the health care debate rages on, some politicians are calling on the Obama administration to slow down and get a few tangible things done first (e.g. stop denying coverage because of pre-existing conditions) rather than tackle everything at once. Putting aside the politics of the suggestion, it's a reasonable comment. Is it really possible to transform the entire health care system in one fell swoop when there are so many complex issues represented by diverse constituents? And is it possible for Obama and his team to do this when they also are transforming the financial system, engineering an economic recovery, bolstering the automobile industry, withdrawing from Iraq, increasing engagement in Afghanistan, building a coalition to fight global warming, and so forth?

Beyond the specifics of health care, these are classic questions of focus and bandwidth — and they have relevance not just for the Obama administration, but for any manager with an ambitious agenda and a desire to get things done. In fact, most managers I talk with these days are struggling with the feeling that there is more to do than is possible in any given day, week, or month — and that no matter how hard they work, it's impossible to make enough progress. If you are one of these managers, you might want to ask yourself whether the feeling of overload is solely the result of the complex business environment, or whether it is at least partially self-inflicted.

One of the tough truths of management is that we all have trouble making choices. While older and supposedly wiser, we still often act like kids in the candy store who want everything. So we go after too many markets and too many demographics with too many products. We have too many research initiatives, too many locations, and too many special projects or studies. We proliferate products and projects and programs and proposals — each one of which makes good sense by itself, but in the aggregate overwhelm us, our organizations, and our customers.

Some of the best CEOs and managers are those who stop things and get their companies or their teams focused. Jeff Kindler at Pfizer cut out research programs, consolidated locations, and eliminated committees. Gary Rodkin at ConAgra Foods sold off brands and dramatically reduced the number of promotions so that the focus would be on bigger and better rather than "more." Even General Motors has gotten the message, sold off brands, and focused on far fewer models.

GE's Chief Learning Officer, Susan Peters, notes that for successful managers at GE "prioritization and focus are keys to doing well. Sure there are other things that are not on the priority list, but you do them differently or more slowly." It's good advice at GE, a company that operates in many different industries around the world. But it's also advice well worth considering for any manager — whether you are president of a small company or president of the United States.

How important is focus to your success as a manager? Do you feel you can focus enough at work to be successful?

Ron Ashkenas is a managing partner of Robert H. Schaffer & Associates, a Stamford, Connecticut consulting firm and the author of the forthcoming book Simply Effective: How to Cut Through Complexity in Your Organization and Get Things Done (Harvard Business Press, December, 2009).