So You Want To Be An Entrepreneur?
Dreams. You dream of building the next multi-billion dollar company. You dream of giving talks worldwide, San Francisco, Paris, New York, London, Lisbon. You are already dreaming of what magazines like Forbes, Inc., Entrepreneur, and others will write about you.
And so it comes to pass that you discover entrepreneurship is almost nothing like that. Every year millions of people start a business, and every year millions move back to being employees, their dreams broken. They just quit because Entrepreneurship is 99% pain.
Most people think they know this, but they underestimate just how hard it is. The 3 am dark hours, the constant gnawing worry, the family no longer speaking to you as you skipped the last 3 booked holidays in a row, and long all-nighters just to keep your company afloat. Becoming an entrepreneur is probably the hardest thing you’ll ever do in your life.
Who is an Entrepreneur?
This first question is your most important question because it describes who you are or who you need to be. And if you don’t resemble that definition, then it’s time to make some changes or pass.
Investopedia defines an entrepreneur as a person who creates new businesses while bearing most of the risks and enjoying the most rewards. Entrepreneurs are often seen as innovators, a fountain of new ideas, creators of new services, goods, or procedures.
From this definition, two things become immediately apparent.
The first is that an entrepreneur creates. At the very base of the entrepreneurial spirit is the ability to create. To see gaps in the marketplace and create a product, service, or system to fill it. Every good entrepreneur is creative at heart, and unless you learn how to recognize problems and create solutions, you’ll always struggle with entrepreneurship.
The next quality of an entrepreneur is that they are risk-takers. There are few things riskier than investing your time and money into a venture that you’re not sure will work, but that’s what an entrepreneur does daily. According to a Statistic Brain study, Startup Failure Rate by Industry, 50% of US companies failed after five years, and 70% failed after ten years. In another study by Shikhar Ghosh, a Harvard Business School senior lecturer, over 75% of venture-backed startups fail, showing that many times, it’s not about inadequate funding.
To become a successful entrepreneur, you must be willing to take risks, sometimes crazy ones. For example, the CEO of FedEx, Fred Smith, famously flew to Vegas with the company’s last $5,000 after being denied a major loan, played blackjack, and won $27,000. Just enough money to keep the company afloat for another week. Risky? Yes. But that’s just a typical weekend for an entrepreneur.
Why’s Entrepreneurship so popular anyway?
As of 2016, the Kauffman Index of Startup Activity released a report which showed that 550,000 Americans start new businesses every month. This entrepreneurship growth, or “adults switching into self-employed business ownership,” as the Kauffman report describes, is due to several cultural and economic factors.
Believe it or not, entrepreneurship is as old as civilization itself, and the oldest entrepreneurs can be traced to 20,000 years ago. The first known occurrence of trading between humans was in New Guinea, around 17,000 BCE. Of course, much has changed since then, like the invention of money, for instance. We probably take it for granted, but trading was extremely hard without the existence of a commodity that was universally accepted.
In our modern-day society, as the face of the traditional job market changes, coupled with the ease that technological innovation brings, entrepreneurship is becoming a more viable option for many people worldwide.
Think about it this way; entrepreneurship involves building products, services, and systems that solve a market need. By creating a bigger market, more goods and services are needed, and more entrepreneurs are required to create them.
Years ago, most people’s ultimate career goal was getting a job with the government or an established multinational corporation, because they provided workers with a stable income and career. As the economy becomes more volatile, however, such as during the 2008 economic crisis, and more recently, the effect of the pandemic in the economy, more people are beginning to turn away from traditional career paths into entrepreneurship. For instance, The U.S Small Business Administration reported that immediately after the financial crisis of 2007-2008, small companies accounted for 67% of all new jobs in the US from mid-2009 to 2011.
Before the 21st century, starting a business was almost impossible without huge capital, but technology began to change that. As more small businesses powered by technology began to spring up, that narrative began to change. The stories of successful startups helped convince many that entrepreneurship is a viable career path, and more people now want to become entrepreneurs because the environment has changed. They can see the opportunity in the markets, and are finding different ways of meeting existing needs.
Practically speaking, it’s much easier to start a new business than it ever was. In most cases, the technology needed to launch a business is just laptops, and access to the internet is relatively inexpensive and accessible. Technology has also made it easier for collaborations to be done across borders. Businesses can keep their overheads low but automating their processes or hiring talent from various locations. This makes the business cheaper to run and many times more effective than running the same kind of business 50 to 80 years ago. For example, companies that make SaaS (Software as a Service) products (yes, think Slack, Google Drive, and Dropbox) are much easier to create than a brick-and-mortar retail store. Today, statistics show that there are more than 10,000 private SaaS companies, apart from publicly traded companies. Sectors like travel, e-commerce, education, and food have given birth to technologies like social media, IoT, and AI, all of which provide new and exciting playgrounds for entrepreneurs to create new products and services on.
Another popular reason why many people, millennials especially, turn to entrepreneurship is that they love independence. There’s a growing sentiment for independence from employers. The Amway Global Entrepreneurship report in 2016 identified the need for independence to be one of the two most important motivating factors for entrepreneurs starting their businesses. Self-fulfillment is the other. Many wannabe entrepreneurs feel, erroneously, I might add, that they’ll answer to no one when they start their business, and this is a temptation that’s almost too great to ignore.
The rhetoric about “following your passion” or some other cliche line; those are likely to get you into serious trouble (although, you should love what you do). Instead, in part two of this article, I’m going to expose four hard truths about becoming a successful entrepreneur, but also some truths that may help you avoid going back to being on someone else’s payroll.