So you want to be an entrepreneur?
The questions I get the most from people who are musing about leaving their jobs to start their own thing is:
“What does it take to make the transition?”
For many, there seems to be an invisible wall that separates the job world and the entrepreneurial life. What they really want to know is how to climb this wall and get on to the other side, and survive.
In my experience, having gone through a long career at large enterprises, only to start my own software company years later, there need to be lots of necessary mental-shifts to make this transition.
Here’s some of what you should expect and need to know:
Can you handle peak emotional states?
Entrepreneurship is a big mindset game. A roller coaster of emotions. Very high highs and rock bottom lows. And you need to be on top of it and in full control to make it through.
On the other hand, Employment doesn’t invoke peak emotional states. On a good day you feel somewhat good and on a bad day you feel slightly bad. You can get a 10% raise after a performance review and feel slightly good about it, but you can never double your salary in a single raise, you probably have to wait a few years proving yourself first before you can double your income and that gradual increase will never make you feel ecstatic. If you do something wrong and get called for it you will feel somewhat bad about yourself but you will still get your paycheque at the end of the month. No harm was done and mild emotions all the way.
That’s not the case with entrepreneurship. If your idea fails or doesn’t work the way you thought it would, you won’t feel bad, you will feel devastated. If you’re not getting the traction you need, money will not come in and it will make you feel like a big loser. Bad decisions will cost you even more and will make you feel horrible. So you need to have the stomach for this kind of life but if you can get through it you will win because entrepreneurs always adjust, so you figure out what is not working and you fix it and as a result and you get better at it.
And when things go extremely well and you triple the amount of money you made the previous month you will feel ecstatic and on top of the world. A feeling you will never get to feel as an employee.
Those peak emotions make you feel alive like nothing else, but some people can’t handle them. And if you can’t handle them then maybe this isn’t for you.
Can you handle family and peer pressure?
Let’s imagine you are one of those who can handle peak emotions, the next hurdle is pressure from people you love, who are close to you but don’t fully understand what you are doing.
Entrepreneurs have to try different things and adjust as they go. There is no process or a list of steps to go through to get things going the right way, especially at the start. From other peoples perspectives, this process of “trying different things” may look like as if you don’t know what you’re doing and they will start questioning your abilities.
This will demotivate you like nothing else. It can be a major setback for many entrepreneurs especially in the early stages when quitting is still an option.
Can you let go of the idea of working 9 to 5?
Entrepreneurs work when work needs to get done. If you are working on closing a customer and they want to talk at 5 AM because they are in a different time zone, you don’t say no. You need to adapt to the idea that you work when work needs to get done and sometimes it is not during regular office hours. Too bad but that’s what you signed up for.
You get better at this with time and when you build a name for yourself it gets easier to work during fixed office hours. But at the beginning, this is usually impossible and you must do whatever it takes. Entrepreneurship is not a 9-5 endeavor.
Do you work for passion or work for security?
For many people, life’s major goal is not to make a dent in the universe. They don’t want to build or make anything small but sustainable either. They don’t have a calling or a passion to pursue. Their biggest goals revolve around raising a family, providing for their children and investing in retirement plans and seeing their investments grow year after year without having to deal with any risks. They treat each paycheque as a building block, a step forward in attaining a secure and stable life. Growing their wealth slowly along the way. These people work for security and are very happy with this arrangement. And that’s OK.
Professional athletes work for passion. Musicians, Writers, Artists, Investors work for passion too. Entrepreneurs also work for passion. They have a calling and they need to see it through. They need to bring something new to the world. Be it something big or small, but they must pursue that passion until the end. This is their calling. Their happiness depends on it. Their existence depends on it. Like professional athletes, they train their skills every day, they work with coaches, they push themselves to limits. They constantly learn new skills. This is what it takes.
Do you want to work for security or for passion? If you answered passion, then what is your calling? What is your big why for becoming an entrepreneur? If it’s not clear then I advise you to figure it out before you pursue this path.
Are you able to let go of the idea of paycheques?
Once you jump into entrepreneurship, nobody owes you a paycheque anymore. The concept of paycheques is replaced by the concept of cash flow. This means that it is your responsibility to figure out how to bring in consistent CASH (not accounts receivable) into the company month after month to pay your bills, pay what you owe others, and pay yourself.
In the early stages, those payments to yourself may not be regular, they may be different amounts each time. There are no guarantees. If you get to the point where you can pay yourself a regular amount at regular intervals it means you have succeeded. But to get there it will take time and money might not come in when you need it. This will affect your ability to get loans, get mortgages, buy on credit and a lot of things you take for granted when you are an employee.
Yes, you can prepare for this before you quit your job and save a chunk of money to use as a runway, meaning you pay yourself regular amounts until you get a regular cash flow going. Or you can get some investment, but ultimately this only buys you a short timeframe which in most cases will not be enough to reach your escape velocity, i.e. a regular cash flow that can match your salary.
Are you able to work without a paycheque?
What is your tolerance for ambiguity?
When you are employed, everything is clear. You know what you need to deliver to get paid. But when you work on your own nothing is clear. Nobody will tell you what to do next. And if you can’t figure out what to do next on your own, everything stalls. Not only that, you need to have the discipline and the motivation to know what needs to be done at a healthy pace. Nobody is chasing you with a stick and this can be a big cause for anyone to procrastinate and to stall.
This goes for everyone on your founding team as well. As an entrepreneur, the last thing you want to see is someone on your founding team come and ask you what they should do next. Everyone needs to be able to know what needs to get done next on their own. Even when the next step is not clear.
On a scale of one to ten, what is your tolerance for ambiguity?
Are you able to get paying customers?
Most people who want to quit their jobs and become entrepreneurs are stuck in motion. They are terrified to quit their jobs. They read books and they watch videos and they go to seminars that get them pumped up only to go back to square one the next day.
Why is that? What is holding them back? I found that the fear of quitting will never go away no matter what you do. The only way to overcome your fear of quitting once and for all is to prove to yourself that you can bring paying customers for whatever it is that you want to do as an entrepreneur. It is that simple. And if you can prove this to yourself before you quit then quitting will be an afterthought.
In the same way you have to test your business idea with a minimal viable product, you have to test your ability as an entrepreneur to get someone to pay you for what you plan to make. And if you can do this before you quit your job all the better.
Remember that no one wants another app. Your brilliant idea is probably not needed in the world, yet. Have you tried selling some version of what you want to make as an entrepreneur?
Are you process oriented?
Some people equate work to following processes. Unfortunately, the more you work as an employee the more you get trained to follow processes. This is because when companies get big its the only way to ensure that things get done right. As a result, managers will reward people who follow processes and punish those who don’t. They are not trained to accept that there are many ways to get something done and that only the end result is what matters.
Insisting to follow processes kills creativity. Entrepreneurs are constantly looking for ways to do things differently and better. Innovation comes from breaking processes and old habits. Not following the same old ones over and over. This makes entrepreneurship the act of breaking processes by definition.
Processes carry with them a lot of unnecessary overhead. It’s amazing what gets accomplished when you have control over your own time. This is my biggest takeaway from entrepreneurship. Its almost as if those processes are designed to slow you down on purpose so you don’t get time to work on anything else but your job.
If you hate following processes, it’s a sign that entrepreneurship might be for you.
Are you willing to let go of promising career?
Many people mistake jobs and careers as the same thing. They are not. Careers can take the form of ascending paths within organizations. Career seekers are ambitious people with big goals (just like entrepreneurs). They can accomplish their goals working for others within organizations faster than if they would working on their own. They can deal with organizational politics and know how to get rewarded for their skills and maneuver well around gatekeepers.
On the other hand, jobs go nowhere. You are working year after year just to keep the status quo without much progress. If your employment isn’t providing you a solid career path then it might be a sign that entrepreneurship might be a better path for you to get ahead in life. But are you willing to let go of the possibility of a promising career in a big organization to pursue your own thing?
* * *
Now that we’ve gone through this reality check, and your answer to all those questions implies you have what it takes, my advice is to start by finding someone who is willing to pay you for something you will do or make. This is the first step.
And remember, nobody is born an entrepreneur, it’s a skill that you acquire and a muscle that you train.