updated 9/10/2011 4:15:28 AM ET 2011-09-10T08:15:28

Seattle-based architect Milan Heger was on the edge of the abyss. Before the economic downturn, Heger had a thriving business designing residential and commercial properties and, in 2005, launched a furniture line. His work appeared in store windows and magazine articles. Then came the Great Recession and the housing bust. Heger's contracts vanished. He had to cut his staff from five to one. By 2009, he was waking up nights in a cold sweat, worrying about his family's future.

"The biggest pressure is the status of my mortgage, college payments," Heger says. "I felt not like a failure, but like a father who wasn't doing what he was supposed to do. I'd sit in the car in the driveway and not want to get out. It's hard and continues to be hard."

His resources remain so stretched that he recently cashed in a portion of an IRA.

Unfortunately, the economic downturn provided Heger with an excruciating lesson in one of the least-talked-about aspects of running a business: living with risk, and the price it exacts on brains, bodies and bank accounts. Though entrepreneurship may offer the occasional act of swashbuckling derring-do--or, at least, high points of excitement--business owners usually just have to move forward through a not very glamorous, prolonged state of pulse-pounding tension about whether their business will make it.

Building and sustaining a business is a day-in, day-out battle between uncertainty and willpower. Your ability to persevere through prolonged periods of risk and manage the stress that comes with it is as important to your company's survival, as well as your own, as any business decision you'll have to make along the way.

"Running your own business takes nerves of steel," says Dan McDade, founder and president of PointClear, an Atlanta-based prospect development company. McDade says he once had to wait for a client to overnight a check so he could make that week's payroll.

Risk is, of course, part of the price of starting a business. You ante up your nest egg, credit rating and time in exchange for the chance to determine your own destiny and reap the financial rewards. The problem is you don't know when or if the payoff will come. That means having to withstand long periods of uncertainty with no discernible progress while bleeding resources and making decisions based on ever-changing market conditions.

The academics call the ability to get through this twilight zone a "tolerance of ambiguity." A blend of stamina, self-belief, nerve and optimism, it's one of the hallmark traits of entrepreneurs. A low (or nonexistent) tolerance of ambiguity keeps risk-averse people at corporate desks. The better you can handle the unknown, the higher the odds of outlasting your business's biggest challenges. Survival comes down to managing the fallout of long-term risk, from living with debt to the high anxiety of chronic fear and stress.

Cash Crunch
The best way to understand how you handle living with risk? Look at your ability to tolerate debt and its potentially gut-twisting consequences--the savings or house that may be on the line, a shrinking income, mounting loans or credit card debt. Financial risk is a bona fide existential threat, making it an easy trigger for the fight-or-flight machinery of stress, which only makes matters worse.

Mounting debt and dwindling reserves can definitely put the vise grip on your dream. "We put a lot of money into this. $30,000. It's still not paying the bills. We feel like we're drowning," says Paige Smith, the Sacramento, Calif.-based owner of Pure Belly, which sells obstetrician-endorsed maternity wraps and bras. A mother of four whose husband was laid off from his job the day her company launched, Smith has been hanging on through a white-knuckle ride.

She would do well to follow Kim Holstein's line of thinking. The co-founder of Chicago-based Kim & Scott's Gourmet Pretzels, Holstein was in the same place not all that long ago. "It was very scary to be in debt," she says. Holstein and her husband started the company on a $25,000 credit card line. Whenever they hit a rough patch, like the eight-month stretch when sales headed south, they kept coming back to the original opportunity: the niche for a great soft pretzel.

"We focused on the possibilities instead of the fear," says Holstein, whose pretzels now pull in $15 million per year.

Entrepreneurs need to practice focusing on what's ahead. They need to compartmentalize, keep their focus steady and shove worries aside. They have to believe in the power of the quantum leap. You may be surrounded by cardboard boxes and subsisting on fast food, but your vision for your company's future must remain clear.

"Entrepreneurs have a pain threshold," says Tommy Knapp, assistant professor of clinical entrepreneurship at the University of Southern California's Marshall School of Business, who also co-owned 19 surf shops in Hawaii before selling them to Billabong. "Where others say ‘I've done enough, I'm not willing to move forward,' entrepreneurs will keep going."

Debt doesn't make you a good entrepreneur, Knapp says, and the goal should be to get out of debt as soon as possible. He advises entrepreneurs to manage financial risk and the stress that comes with it by minimizing debt through creative husbanding of precious cash. "Great entrepreneurs get their customer to put down a deposit, or they go to the vendor and ask [for] extra terms," he says. Push for quick payment and delay any cash going out from your coffers.

Emily Blumenthal, New York City-based founder of Handbag Designer 101, suggests an additional sanity-saving strategy: "You always need another source of income. I've always freelanced and taught classes and kept other sources of money as a backup."

Pressure Valve
According to the SBA, 70 percent of small businesses fail within the first seven years. The risk is real, as is the strain that constant uncertainty places on one's nervous system. Chronic stress can lead to any number of serious health problems, from insomnia to heart attack and stroke.

Smith of Pure Belly has been going on just three hours of sleep per night for a year. She's lost 20 pounds. "It's physically beating me up. I forget to eat. I'm so busy thinking about what I need to do for the business I'm not taking care of myself," she says, adding that she has no strategy for coping with the stress.

Entrepreneurs need to build a stress management plan as a companion piece to their business plan. It should include techniques to help cope with the pressure cooker of living with uncertainty, from reframing and disputing irrational thoughts to relaxation exercises ( see sidebar ).

The stress response hijacks the rational brain and turns the wheel over to the emotional hub, the amygdala, which loves to jump to the conclusion that the sky is falling. When the inevitable setbacks or pressures occur, the amygdala responds as if it's Armageddon, firing off catastrophic all-or-nothing thoughts--that your business is failing, for example, or that you're a loser. The stress response goes off before we can think rationally about the situation, so you have to learn to recognize when you're in its grip before the emotional nonsense takes over your brain.

"Ask [yourself] what is the real threat and what is making it threatening," says Serena Wadhwa, a clinical therapist at Alexian Brothers Behavioral Health Hospital in Hoffman Estates, Ill.

Despite the setbacks, you can't keep a good entrepreneur down. At least not for too long. Architect Milan Heger has made some strategic adjustments, shifting to affordable instead of luxury homes. He's excited about a new line of green furniture, including a coffee-bean chair, and a book he published last year, The Art of Freedom.

"I'm more clear than ever that I want to follow my passion," Heger says. Even, he says, with "scraped knees."

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