Should You Be an Entrepreneur?

It’s hard, and it’s not for everyone.

A friend of mine recently commented that most of the business cards he gets these days are from people calling themselves ‘Founder and CEO’, a description pretty much unheard of 10 to 15 years ago.

Being an entrepreneur is the big thing at the moment. It seems everyone and their dog has the desire to own their own business.

And why not? Being your own boss brings dreams of freedom, wealth, happiness, self-esteem and opens up opportunities you don’t get in a job.

Or does it?

Does being an entrepreneur really bring all the benefits listed above? Well, yes, it can, but it also requires compromise and commitment of a scale beyond anything you’ve experienced in a job.

Let’s break it down and look at the details.

Commitment

A typical job requires your presence for around 40 hours a week; if you’re in a senior position, this might stretch to 50 or more. You might also need to deal with phone calls or email outside of work hours.

When it’s your business, though, it’s 24/7. You live and breathe it, especially in the early years. It’s a bit like having a baby; it’s a fledgling company that requires nurturing and continual care until it’s self-sustaining. You can’t have a day off and forget about work. Weekends and evenings are no longer free time to spend as you wish. In fact, chances are you’re getting out of bed much earlier than you’d like, too.

If you’re young, single, and childless, this commitment is not so bad. It’s not easy, not by any stretch of anyone’s imagination, but when you have other people in your life, a partner, say, or children, then it’s a whole different story. Those people will expect some of your time, and it’s all too easy to feel like there aren’t enough hours in the day to please everyone. Many relationships fail in these circumstances.

The danger is burnout. You’ve got more in the tank when you’re young, generally, but the stress will take its toll. It creeps up on you too, and if you have any hint of psychological problems like anxiety or depression, be very careful. Four or five years of burning the candle at both ends have the potential to leave you a nervous wreck.

Money

There are two main financial elements to any business: Capital and cash flow.

Running out of money is most likely your biggest risk. And it’s not because of a lack of profitability. Cash flow, or the lack of it, is a significant killer of otherwise great businesses worldwide.

It’s less of an issue when you sell directly to consumers; they pay upfront. Business customers, though, will expect credit terms.

So how does cash flow become a problem if you’re making a healthy profit?

Well, it’s simple. Initially, you need to pay your suppliers when you buy stock. But there’s a delay between paying for a product, selling it to your customers, and then getting paid.

You need enough capital to cover the gap. You also need to re-invest in more products. As the company grows, the re-investment needs will get bigger and bigger.

The solution is straightforward enough, at least in theory. Keep more of your capital as reserves until your business becomes self-sustaining.

The problem lies with expansion; more growth needs more re-investment. Businesses that experience rapid growth can easily run out of day-to-day cash.

In the beginning, money will be tight. Many successful entrepreneurs have written autobiographies, and there’s almost always a common theme. In the early days, they struggled for money or could barely afford to eat.

On his Diary of a CEO podcast, Stephen Bartlett discusses stealing pizza from a local shop because he had no money. He’s a multi-millionaire now but made some serious sacrifices at first. It’s a great podcast, by the way, well worth a listen.

Responsibilities

You could run your business alone; you’ve no one to answer to and no one to be responsible for. Sounds great, right? It’s lonely, though, and if you’re sociable, you’ll hate the solitude.

Every business reaches the point where it needs employees. So as a business owner, you need an HR hat. You’ve got to create a job spec, advertise, and then interview. How do you know if you’re getting the right people?

Along with staff comes a heap of responsibility. The premises must comply with various rules: fire safety, welfare facilities, health and safety, ventilation, working temperatures, desks, chairs, eye tests… the list goes on and on. There are also regulations governing the level of (expensive) insurance you need.

Humans have baggage: relationship problems, mental or physical ailments, financial or family issues. Personality clashes will arise between employees. I’ve seen people literally trading punches before.

Employees need to be paid on time, every time. You can’t kick their pay packets down the road for a week or two like you might be able to with a supplier, so your reserves have to be enough to cover wages above all else. You should expect your wages last, if at all.

All of which you, as the Owner/CEO/Founder, will need to deal with in the early days. And you won’t get many thanks for it either.

Property

You’ve got an office, warehouse, or other property where you conduct your business. You probably pay rent or a mortgage on it.

Property is expensive: monthly taxes, insurance, utilities, maintenance, and repairs. Not only do these swallow cash, but they also take time to manage. Time is, of course, money.

Travel

The image many people have of an entrepreneur is someone jetting off to meetings in glamorous cities, staying in glitzy hotels, wining and dining clients.

The reality, particularly during the startup phase, is much, much different.

Going to see a client in a city three hours away for a nine o’clock meeting? You’re getting up at 05:00, in the car by 05:30, allowing time for delays, then pounding the highways. With busy roads, you’re mentally tired before you even arrive.

You might see several clients in a day, then stay over. You have a small budget, so it’s a cheap place with few luxuries.

However, I’ve stayed in hotels thousands of times and stopped caring about the luxuries years ago. I need a comfy bed and hot shower and not much else. The cheap places do this very well.

Driving is a monumental waste of time though, you can’t work other than handle phone calls (hands-free, of course). Self-driving cars will change the game for executives around the world.

Flying is a bit different as you could work during the flight and in the airport. You waste time hanging around in queues, though, and you still need to travel to and from the airports.

Travel has a fundamental problem: you’re not handling the day-to-day stuff while you’re away. When you return, you’ll lose a day getting through your inbox and the queue at your door.

Summary

Be under no illusion that being an entrepreneur is hard. The first few years will be a journey like nothing you’ve experienced before, and you might not make it through. Most businesses fail within 5 years, after all.

If you do make it, though, congratulations, you’ve achieved something the vast majority of people haven’t, nor could they.

On the other hand, if you’ve read this and decided it’s not for you, there’s nothing wrong with that either. Success in life is about what you make of it, not how much money you have or how big a business you run.

Being content and happy with your life is a significant achievement in itself; you don’t need to judge yourself by what other people have done.