This 54-year-old mom gambled her children’s $60K college fund to get her side hustle off the ground — and lost it all. Here’s why she stands by the risky move

Starting a small business can be risky

Vaccarella took a big risk, but her kids were young and she had a steady income, so it was possible to recover her initial loss — at least partially. But without a windfall, it would have been difficult to replace both the $60,000 in funds as well as the investment growth for that money over time.

Taking that first big risk helped her learn to trust her gut and build her confidence, Vaccarella said.

“Somewhere in my mind, I think that I can do anything,” she said. It’s a sentiment not uncommon among entrepreneurs.

While confidence may be crucial for success, research from the New England Journal of Entrepreneurship has shown that overconfidence can lead to an underappreciation of the risks behind small business failures.

Many new businesses do fail. According to the Bureau of Labor Statistics, about one in five (21.5%) new businesses don’t survive their first year, about half (48.4%) don’t survive five years and about 65% don’t make it to 10 years. Those sobering numbers underscore the need to be comfortable taking risks and understanding how you’d be able to recover if your venture doesn’t land.

Amazon founder Jeff Bezos’ approach to risk — as described by CNBC — is that risk can be either a one-way door or a two-way door. That means some decisions have irreversible consequences, while other missteps allow you to recover. You’ll need to decide which risk you’re willing to take.

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Consider other financing options

If you have confidence in your endeavor but are unwilling to risk your children’s college fund, other funding options could be available. A good starting point is a loan or line of credit from your bank. If this is unsuccessful, you may be able to borrow from an online lender — although they often have higher interest rates and fees.

A less expensive option may be a traditional lender that is backed by the U.S. Small Business Administration, which has programs for microloans, larger loans and certain non-profits.

Grants could also be an option for some entrepreneurs. If you qualify for one at the federal, regional or state levels, you won’t have to pay the money back. However, researching and applying for grants can use up a lot of time and energy — and they’re typically industry or charitablty specific.

Of course, you can turn to friends and family — like Vaccarella did — but you’ll need to be prepared to deal with the fallout from a failed venture. Finally, there’s always asking for help from complete strangers through crowdfunding. While you’ll need to be a savvy marketer to get the word out and set your product apart from the competition, some businesses have been successful in kickstarting their companies this way.

Whatever your business venture, pursuing it will come with risks — only you can decide if your children’s college fund is worth that risk.