What it means to be an entrepeneur

Being a business owner is not for everyone. Period. End of Story.

I have encountered quite a few people so far who are quite capable of starting a business. In fact, I have tried to establish businesses with some of them. My personal experience trying to recruit people into starting a business together has been unsatisfactory. I do not blame the people nor do I blame myself for these failures. But make no mistake about it… If I decided to wait for the right people to come along before I start a business, it is never going to happen. I now understand that starting a business is not for everyone (including the people who say they want to start a business!) and if this is what I want to do, I better plan now to do it on my own.

I believe most people have a couple of reasons why they are not cut out to be an entrepreneur. First and foremost seems that many people are risk adverse. They see starting a business as an extremely risky endeavor, almost on the order or jumping out of an airplane without a parachute. I find this to be the number one reason why intelligent, capable of people will never start a business of their own.

Almost every endeavor worth doing has risks. Starting a business is no different. When you are the boss, you lose the safety net of a regular job. Mistakes that cost you money, credibility, or even your company fall squarely on your shoulders. Those risks are inescapable for most business owners. An entrepreneur has to be able to identify the risks, define which ones they can live with and decide which ones they need to avoid at all cost.

Not starting a business also has risks. Think about this for a minute. When you work for someone else, you are putting your career and your livelihood in the hands of someone else. You assume the people you work for have your best interests at heart, but they do not. Every month or quarter, you can be certain someone in the company is looking at the numbers and making a determination whether or not to keep you on the payroll. They are deciding if you deserve the 3.5% annual payroll increase. They are deciding if you should stay in your current dead-end job or if you should be given the ‘opportunity’ to try something else. The longer you are doing the same job day in and day out, the less current your skills become. The less current your skills, the less likely another firm will hire you. The less likely another firm will hire you, the less likely you will leave. At this point, you are effectively trapped. Very risky indeed.

The risk/reward equation is why people start businesses in the first place. The key part of the equation is that risks should also present rewards. While risks of starting a company are basically limited to the costs of starting the business in the first place, the rewards have an almost unlimited upside potential. I’m pretty sure your upside reward potential is capped when working for someone else.

The second reason most people will not start a business is timing. In my opinion, people at the beginning or at the end of their careers are more likely willing to start a business of their own. People in the middle are always waiting for their next promotion, or their next office, or their next role. They are waiting to see what is around the next corner. It is also no coincidence these same people are just starting families and see starting a business as too much time and too much effort.

Third seems to be a general lack of capital resources. They cannot ‘afford’ to quit their day job or cannot commit money to start a new business. Lack of capital is the most common response people cite when asked what prevents them from starting a business. To me, it is the typical short-sightedness of today’s culture. People cannot see the big picture. They feel they need to invest in their 401k instead of spending that money on their own business. (The irony is too great for me… Why does it make more sense to invest in a company that I have almost zero influence compared to investing in a company in which I have 100% control?)

One of the problems I have encountered in the past is people wanting to start a business, but then lacking the general follow through to do so. I have made this mistake more than once, so I now have a pretty hard and fast rule. If you want to work for me and you have the skills I need, then I will try to hire you. If you want to be a business partner, than you can buy shares in the company. There is no free lunch. If you want to be an owner, then you are going to buy your way into that position. It will weed out the people who do not have the money, the time, the drive, who are risk adverse, etc, etc.

The rest of the reasons seem to be centered around the common theme of not knowing what to start, not having the next big idea, not knowing how to start the process, etc, etc. This is your basic procrastinator reasoning. I’m pretty sure what you start is less important than starting something, anything. My thought is that no matter what idea you have at first, it will change as you start understanding the market, understanding your customers, and understanding which niches are not being filled by the current products in the marketplace. I think people truly believe they need to have a killer idea in order to start a business. While I’m sure it helps, it isn’t common and it most certainly isn’t required.

My personal experiences attempting to start a business are as follows:

1) Do not wait for a partner or partners. I’m on my own for this one.

2) The risks of starting a business are almost equal to the risks of not starting one.

3) If anyone shows interest in being a business partner, I will do a ton of due diligence to make sure they are a perfect fit. I will not grant them a share of my company, but I will allow them to purchase a stake.

4) Starting the business is more important than what type of business it is. Taking the steps to start the business is the most difficult part. Deciding what to do once it is started is secondary and is a function of the people you have hired.

That is it for now. Next time I will be talking about what business I will be starting.