The Reality of Entrepreneurship

 
Hello, my name is AJ and I’m an entrepreneur. Sounds like the beginning of a twelve step program meeting. I introduce myself this way because a lot of people make entrepreneurship sound wonderful, even magical. You can be your own boss, set your own hours, you create jobs and contribute to society. All good things for sure.

aloneBut there is a dark side. First among the dirty little secrets of entrepreneurship is that it’s hard.

More difficult than you can imagine

Starting something from nothing is hard. Even when you can get help, as so many do through franchises, it’s still hard. Even though people talk about the depressing statistics of business failure, which vary widely, the picture they paint is still rosey. Entrepreneurs are considered brave and they are revered for their actions. That’s fine but let’s not encourage people to be foolish. There’s no reason to throw caution to the wind and go for it without a plan.

Starting a business takes up more time than most people can physically give, it’s tiring. I’ve heard it said that the only person who cares about your business is you and it’s true. No matter how good the team you build is, the business is not their priority. They will call out when you need them most, they will say the wrong thing at the worst possible time to the most important customer, and you will have to fix it all. They will leave for a few cents or a few bucks more per hour. Owning a business can be frustrating and yet you have to be there with enough enthusiasm to spread around.

All that difficulty can lead some to become disallusioned but the successful ones will have just a bit more positive energy than negative.

More expensive than you planned

It also takes more money than most people realize. I was told once that no matter what I planned, double the amount of time and money I thought I needed, even if my estimates were high. I can tell you from experience that advice was 100% correct.

Under capitalization is the single worst mistake someone going into a business can make. We’ve all heard about the outliers who started with a hundred dollars and made millions, but if that were the norm we’d all be millionaires. You have to know that, if you need to, you could carry the business expenses for months or maybe even years.

Other people’s expectations

When you see friends or family and they ask how’s business, they don’t understand that you might have had a bad day. They don’t understand that bills are coming due and revenue might not be keeping up. If you’re honest and tell them it’s hard, they’ll usually respond with “but it’s all yours right?” as if that makes it better.

You can’t go to friends and family for solace because they don’t understand, and you don’t want to go to other business owners for fear of looking weak.

It takes longer too

I’m over a year into my business and things have stabilized. Everyone wants to make a profit right away but it takes longer than you think. What matters more is cash flow, positive cash flow. Positive cash flow and profitability are two different things. Startup costs aren’t paid for quickly, they’re large and revenue grows slowly.

I saw a friend shortly after her second child was born and asked how it was going. Her response? “Oh my God no one told me it was going to be this hard.” That’s how I feel about entrepreneurship so I’m here to tell you it’s that hard.

My advice? Think long and hard about going into business. Imagine every bad scenerio you can and then imagine what you’ll do to get out of it. Plan for the worst and work hard, harder than you ever have for the best.

Just as I was finishing this post someone on LinkedIn posted this article. It’s worth reading and backs up everything I say here – and then some.


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You Can’t Get Rich Working for Someone Else or Can You?

 
I’m sure you’ve heard or even repeated the expression “You can’t get rich working for someone else.” I’ve said it but I’ve grown to realize it’s not true. I’m not talking about high level executives with huge salaries, stock options and bonuses that make them a millionaire each year. I’m talking about a normal person with a good, but not extraordinary, job.

stacks-of-cash-2The secret (I hate that word because it’s not a secret, it’s common sense) is to save, often aggressively, work, really hard, and invest, wisely. A couple of weeks after writing this I saw a bit of news about a school teacher who left behind an estate worth $10 million when she died. Along with her twin brother they lived by these three “secrets” and it paid off.

SAVE

Wealth is about opportunity but being in the right place at the right time isn’t opportunity, what you’re able to do when you’re in the right place at the right time is. If you meet an inventor with a great new produt who needs investors, you’re at the right place at the right time but if you don’t have the money to invest it doesn’t matter. That’s why aggressive savings is so important. I’m not talking about normal savings like the advice you’ll read in magazines, I’m talking about serious savings. My wife and I have saved, on average, nearly 25% of our gross income each year. It would have been higher if not for item number three on my list, investments (which some will view as savings but read on to discover why I don’t).

Read here about a woman, Leah Manderson, who maxed out her Roth IRA (that’s $5,000) while earning only $28,000. That’s a 17.87% savings rate. Can you say you’ve saved that much? If not then you aren’t saving aggressively.

WORK

A job is a means to an end. We have to work to survive (unless you want to grow a long beard, live in a shack, and kill your own dinner). A job is also a means to security when we’re too old or tired to work.

While I would highly recommend doing something you love, you should also maximize your earning potential by advancing through the ranks and negotiating well. Hard work means being the go-to person, the lynchpin as Seth Godin puts it.

It has been my ability to increase my income and my aggressive savings that allows me to move on to each What Next.

INVEST

You can invest in yourself by working hard and you can invest your money by contributing to your retirement (401k, IRA, etc.) but that’s not the kind of investments I’m talking about.

I’m talking about investments that require active participation like rental real estate, it’s an investment I’ve used throughout my life (I’ve seen a lot of people use it as an investment very badly). It’s also an investment that requires sacrifice. I can’t have a fancy and expensive house for myself if I’m also buying homes for rentals.

I have also had side projects (some would call them businesses but I don’t think many of them rose to that level). What they did do is provide some extra income to invest in other ways. It also allowed me to learn a lot about myself and business in general.

Now than that I’m older, more established, and secure I’ve invested in actual businesses, recently opening a franchise. The key with all of it is that my job, the thing people say won’t make you rich, made all my investments possible. I call it corporate sponsorship. None of these investments can be considered savings since there’s no garuntee that I’ll get a return or how big that return will be. Once I sell an investment, then fine, the proceeds will move over to the savings category.

You can get rich working for someone else if you’re smart about it and are willing to do more than those who say you can’t get rich working for someone else.


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Creativity Begets Creativity

 

Creativity begets creativity. If you want to be more creative then hang out with creative people, or read about them, or watch them on TV. If you want to be creative find a way to experience other people’s creativity.

I’ve seen a few tweets about something called World Creativity and Innovation Week. I’m too busy to look up what that is because I’m exploring how it can help me. A friend tweeted this:

Creativity Tweet

Curious exploration

Being a curious person I clicked the link and then clicked the second story in the list which took me to a post by Mike Brown. In his post Mr. Brown told a story about seeing a poster called Peter’s Laws which he modified and turned into questions to spark creativity.Peter's Laws

Again being curious I wondered what the origin of Peter’s Laws was. A Google search later I had my answer with this webpage. Peter Diamandis is the founder and chairman of the X PRIZE Foundation which is most famous for their $10,000,000 Ansari X PRIZE for private space flight which Burt Rutan won.

Back to Peter’s Laws

A couple of the laws caught my eye because they fit so nicely with the concepts in What Next.

One law reads “When given a choice…take both!!” and that is an essential part of asking What Wext. You can walk multiple paths in life – we all do it as spouses, parents, employees, business people, and friends. What successful people do is excel on multiple paths and that takes dedication and work. If you aren’t dedicated and/or aren’t willing to work, then you won’t succeed.

The Peter’s Law that immediately follows the one above is “Multiple projects lead to multiple successes” and again we have the key point of What Next. The do one thing well concept is just as wrong as the jack of all trades master of none concept. Who says you can’t do lots of things really well or at least hire people who can?

Back to Creativity

I wasn’t sure what I was going to write my next blog post about but reading Mike Brown’s post and being curious enough to do a little research sparked my creativity and led me to write this, proving that creativity begets creativity. The same can be said about the other traits of What Next: curiosity begets curiosity, adventure begets adventure, action begets action, and success begets success. If you want any of those things then get to know people who exhibit those traits and start spending time with them.

As another of Peter’s Laws states “When faced without a challenge, make one” this is your challenge, to succeed, so what are you going to do about it?


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Daydreams are not enough

I found this article on the psychology today website and it made me think of a rather strange revelation I make in my book, What Next. I write: “I talk to myself.”

This is different than what this article points out. “A common theme among self-help teachings and new age spiritual ideas, such as The Secret, is that you have the power within you to make your “dreams” come true by focusing your mental energy, your “intent” on them. Then, they will come to you. But some new research claims that doing so can actually make you less likely to achieve what you wish for.”

Focusing your mental energy, or believing something good will happen is nothing short of daydreaming if you ask me. Focus your mental and physical energy on something if you really want it. Believe you can achieve your goals but know you have to work at it too.

In What Next I go on to say that “People who ask “what next” seek out new venues and alternative ways of doing something, and they often visualize themselves in that situation. As I visualize myself in a situation, I rehearse, I talk to myself.”

That is being a whole lot more proactive than simply fantasizing. All that rehearsal does nothing for you unless you actually go out and put that practice to use.

Daydreams are a great start but it’s up to you to make them a reality.


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