There seems to be this notion that you aren’t truly committed to following your entrepreneurial dreams unless you quit your job, cash in your retirement, and put everything on the table. That’s naive and frankly, irresponsible. (Yeah, I’m that curmudgeonly ol’ battle axe, shaking her cane at kids and growling about how unaccountable they are.)
I believe that the true test of one’s commitment and mettle as an entrepreneur is to keep your day job AND pursue your dream of starting a business. Try yourself by the refining fires of 80 hour work weeks and the nearly schizophrenic division of your mind between “employee” and “business owner”.
This blog post is part of a series I’m writing about my experience starting a business.
Starting a Business is Not About Money
Do you ever go to a business and think something like, “gosh, they charge $30 an hour for a bike rental and they have 10 bikes! I was here and all the bikes were rented, they must make some good money!”
I’ve done that. I’m pretty sure people do that with our business too. “She’s charging $50.00 per hour per person, and is booked all day! Wow!”
This kind of thinking gets dreamers like us into business to begin with. The (erroneous) math has us cashing in our retirement, quitting our day job, and hanging out our shingle. Without those green-tinted glasses convincing us our business idea can not only support us but probably gild our existence, I doubt we’d launch a single venture. In a way, we need that complete lack of fiscal rationality. One man’s impossibility is another’s opportunity.
Because folks often ask about our business and how we started (and I can see them doing that crazy math when they ask) I wanted to write a bit about why cashing in our retirement, quitting our day job, and hanging out our shingle is actually a terrible way to start a new business.
When I started out I knew that I was in no position to quit my job, even though on paper it was totally doable. A few things kept me from handing in my resignation:
- There were far too many unknowns about the new business.
- I only knew one horse-based start-up that had succeeded (and being a horse person, I knew of a lot of horse-based businesses).
- I had a good mentor and network of friends and colleagues at my job.
- I didn’t HAVE to quit my job.
Do you know what the leading cause of start-up business failure is? It is NOT lack of money!
Running out of money is a symptom of internal issues, not an external force over which you have no control. Lack of funds is caused by: having a bad idea to begin with, lacking leadership/entrepreneurial skills/business skills, and/or assembling a team ill-suited for the job. Can a crap economy have an impact? Yes. But for the 80% of start ups that fail, there are 20% that succeed in the same economy.
There is no shortage of studies and articles about business failure. Go out to Medium.com and do a search for “failure”. You’ll turn up a gold mine of mea culpas (mea culpi?) from founders of failed businesses. The central theme of these has nothing to do with money. My favorite one is by the founder of “Dinnr” – a grocery-ordering app. (You can read his story here.) Note that the VERY FIRST SENTENCE he says he had secured MORE MONEY from his investors. And he turned it down because he couldn’t take it in good conscience knowing that his business was already failing.
Money is funny stuff. I think where we go wrong is the belief that throwing money at a business idea is an “investment”. We place our emphasis on money as a tool rather than a measurement, and I think that’s where start-ups really falter. It’s hard to watch a money stream dry up and have the wherewithal to reflect on the real cause – the business owner, us. Ultimately WE are our business. Our business is us.
Consider the initial investment in a start-up as a loan to a shifty brother-in-law. It’s necessary to keep the peace, unlikely to be repaid, but a pleasant surprise if it is.
That’s why I just couldn’t justify ditching my day job. I knew I needed the leeway to make mistakes, because as a business owner, I’m green. I make mistakes on a daily basis – from pricing decisions to staffing schedules to purchasing. This is the stuff that keeps you up at night, every night. There is a cost associated with every move we make as business owners. At least with a secured retirement and steady income, I wouldn’t be paralyzed with fear over my inadequacies as a business owner.
Cashing in my steady income and retirement for a 4:1 gamble required a greater depth of naivete of business and myself than I already have.
And that’s saying a lot.
Why I’m Glad I Kept My Day Job
- All of my planning, cyphering, and budgeting looked great on paper. Sadly, it had no basis in reality and was completely off the mark.
- I’d done no more market research than a few anecdotal conversations with my friends.
- I really didn’t know what the market WAS.
- I had no clue what my budget needed to be for things like taxes, vets, insurance, licenses…
- I have failed with (relative) impunity.
- Whacko pricing structures, the aforementioned market ignorance, the decision not to operate for most of the month of July due to heat – any of those could have wiped us out. Fortunately, we just tightened our belts a bit.
- I sleep pretty well.
- Yup, sometimes the ol’ money stream from the business just dries up. I ponder my mistakes, and move on, knowing that I can still keep the lights on.
- It actually has been a great networking opportunity to keep my job.
- People want to see their friends do well. They want to be associated with people doing cool things. I’ve received tremendous encouragement.
- The more people you meet during the day, the more people will hear about your business. Not that I storm the halls of the office with a megaphone and announce ride times and prices, but the subject of my business often comes up. Usually it starts with someone asking, “wow, you are so tan! What’d you do this weekend?”
- Because starting a new business should never be viewed as your ticket out of the life you have.
- Until you identify and change what got you into the discomfort of your current situation you are destined to find yourself equally miserable in a new situation.
- The new business isn’t about the money, it’s about the adventure of pursuing a difficult path with only a hope of a reward.
It’s been tough, having the job and business at the same time, but I’m glad to’ve chosen this route.
My next blog post about starting the business is about how one day with Buck Brannaman completely changed my life and I believe changed the outcome of the business. It was one of the toughest days of my life.
Here are some great insights about starting a business:
How to Know You’re Ready to Start a Business (Inc)
When to Quit Your Day Job (Inc)
9 Reasons Startups Fail (Entrepreneur Magazine)
13 Reasons Startups Fail (Forbes Magazine)
5 Reasons 8 Out of 10 Businesses Fail (Forbes Magazine)
