I’ve spent most of my career encouraging people to start businesses and advising them on how to run startups effectively. There is so much content around the coolness of entrepreneurship that it surrounds us. We all know that great fortunes are made in entrepreneurship, but in the annals of Inc., you rarely hear reasons why you shouldn’t start a business. In fact, my columns make the assumption that starting a business is a good thing and a worthwhile endeavor. But how sure are we that is the case for everyone? We should be open to the fact that starting a business might not be a good idea. Having made about every mistake that could be made, I will deem myself an expert in the reasons, at least in theory, not to start a business.
I don’t list these reasons for the sole purpose of discouraging budding entrepreneurs. But if you’re thinking about starting a business and any of these five points rub you the wrong way, you may want to reconsider the path you’re heading down. If, on the other hand, after evaluating these five points and gauging the risks in a sober and realistic way, you still want to start a business, the chances are that you have the disposition needed for entrepreneurship.
1) Starting a business takes an insane amount of work. I’ll keep this short and sweet. Work-life balance is a joke for founders of successful companies; this term does not apply to the startup phase of a business, particularly as the founder of that business.
2) When you fail, it is public and personal. It can be embarrassing to be fired from a job, but failing at starting a business is a much deeper wound, in my experience. A job is a part of you. Your business is a complete manifestation of you. The best way for me to describe the feeling of failing at entrepreneurship is by using an example from my childhood. I used to be a pitcher in baseball. You get on the mound. You throw the ball. The batter takes a big swing and connects big time. He hits it in a nice, high, long loft that lasts 5 to 15 seconds, where everyone can see it leave the stadium. It hurts the whole team, but the crowd is only looking at you. Just in case anyone might not be able to see you, in baseball the mound is elevated above the level of the field so everyone can get a good view of the pitcher. That’s the best way I can describe the feeling of failing at entrepreneurship, except it lasts a lot longer than 5 to 15 seconds.
3) Unfortunately, you may fail. One out of every two U.S. businesses fail in their first five years on the market. This incredibly depressing statistic is actually the very reason why we started Sageworks nearly two decades ago. The chances of success can be good if you do it the right way, but most people quite simply don’t do it that way. And if you fail, your financial losses can be significant.
4) You can’t make friends at work. As the founder of a company, everyone works for you, so you can’t develop real friendships since you are the employer and “the boss.” There is an unequal relationship. Even when you do develop a friendship, you never quite know if it’s real. Entrepreneurship is a lonely occupation, and this inability to generate friendships at work is one of the most glaring representations of that fact.
5) Success (if you ever achieve it) take time. One of my complaints with how entrepreneurship is represented in popular culture is the idea that businesses either fly quickly or fail immediately. You can see these two paths represented in films like The Social Network (the spectacular success) or Startup.com (the spectacular crash and burn). The truth is that it usually takes years to build a great business. Most entrepreneurs that I know who have successful businesses put in about three to five years of hard work to get their businesses off of the ground and to the point they’re self-sustaining.
For those of you who follow my columns, please realize that while the above is true, I’ve been an entrepreneur my entire life, and I wouldn’t discourage anyone from starting a business. Nothing can replace the feeling of starting something from nothing and developing wealth while you do it. It is a risk worth taking. However, I do think that not enough people pay attention to the downside and material risk involved. Be prepared and your success is much more likely.