“I recently left a full-time job to start my own consulting business and wonder what effect this change might have on my career? What downside risk is there in quiting work to go back to school, making a lateral move or staying in a dead end job?”

What are the career consequences if your attempt at self-employment fails and you decide to go back to work? I don’t think you have much to fear. Your career will suffer nothing more than a delay; employers will not hold your entrepreneurial effort against you when considering you for a job. Of course, going back to your former career becomes more difficult with the passage of time as your career skills and knowledge of developments in the field become rusty.

As for the other items on your list: going back to college is not a risk, as you are improving your value as an employee, but only if you acquire technical knowledge you can use on the job–electrical engineering, for example–or general business knowledge, as with an MBA. Otherwise the value gained may be less than what is lost by taking the time off from your career. The one exception is when you become qualified in an unrelated, but intersecting area. An engineer, for example, who earns a degree in law can move to the firm’s legal department and likely secure a substantial increase in compensation.

Changing careers is clearly a risk vs. reward proposition with outcomes ranging from completely unknown to relatively foreseeable. If the field in which you work is in decline (say, film-based photography), the lowest risk option is to leverage your existing skills to enter another field that has long-term growth potential, even if you must take a short term cut in pay.

When changing careers, the least risky move is one that takes advantage of your most valuable knowledge and skills. As a business consultant, are speaking and writing–the skills you now sell–your strongest and most valuable skills? Is knowledge of corporate behavior your strongest area of expertise? Will businesses or consumers be willing to pay more for your expertise and knowledge in these areas than any of your other skills or abilities? If the answer is “no,” then you have taken on more risk than necessary and your willingness to do so is strictly a personal decision. However, you mitigate the extent of your career risk by having a fallback option whereby you can seek employment in the field where your skills and experience are most highly valued.

Staying in a dead end job is like keeping your money in a safe deposit box–there is little risk of theft, but your asset loses value every day compared with money deposited in an interest bearing account. Ideally, one avoids becoming employed in a dead end job in the first place, but for younger workers, a dead end job may be the best job option available at the time a choice must be made. Most people solve the dead end job problem by moving on after several years when future advancement in income and responsibility become less likely.

Making a lateral move is not as much of an issue as the other four concerns you list. If there is no increase in pay or responsibility in the new job, one might still be better off doing the same work for the same pay at a company whose future prospects are brighter, or where advancement opportunities are more plentiful.