Not long ago, I spent some time with a young man who wanted some advice. He told me he wanted to become an entrepreneur.
He was working for a good company and had an exemplary career. He was in a management position with an excellent salary.
He said he had an idea for a new business. “I plan to open the business, get it up and running, and after a few years, sell it off at a profit.”
That sounded like a great plan, if only it were a plan. What he described was a dream with statistically little chance of success.
The US Bureau of Labor Statistics recently stated that 50% of new businesses are still in existence after the first five years. Only 30% are still in existence by year ten. Another perspective on this statistic is 50% of all new businesses fail in the first five years - a full 70% fail by the tenth year.
Becoming an entrepreneur is easy. It’s also fun. But after becoming an entrepreneur, then you have to be an entrepreneur. This is when it gets hard.
I applaud entrepreneurship. I only encourage it however when an individual undertakes starting a new business with a realistic perspective. This fellow was approaching entrepreneurship as he would approach investing. If it were that easy, everyone would do it.
Being an entrepreneur comes with some stark realities. Here are a few to remember before taking that leap.
Owning a business is not a passive investment. Entrepreneurship requires a tremendous amount of resources. It also takes a significant amount of your attention and focus. I have never heard any successful entrepreneur describe their business as an “investment.” The stock market and real estate are investments. Although an entrepreneur may have significant capital invested, the business is their passion and life’s work.
Starting and owning a business requires a commitment. It’s a commitment to making the company viable regardless of the obstacles along the way. It may overtake other commitments. It requires one to take on tasks they may not enjoy or understand. Often there is a significant amount of learning involved. When you commit to being an entrepreneur, you commit to much more than starting a business.
Being an entrepreneur is difficult. It requires hard work, long days and weekends. It’s typically more expensive than anticipated. Sometimes it’s not at all enjoyable. Often times it can be scary. And owning a business can even be a lonely experience, absent the support of others to rely upon.
Starting a business then selling for a profit after a period of time does happen. But this should never be the reason for becoming an entrepreneur. Because being an entrepreneur is much different than growing into a successful one.
Successful entrepreneurs understand the realities of owning a business. They make a commitment to the business for an extended period of time and accept the sacrifices along the way.