Starting a new business is hard work. Really hard work. No matter how hard you think it will be, it will be even harder than that.
I know from first-hand experience. I started my career as a lawyer and helped many businesses get their start, including a handful of financial advisory firms. Then I started a small venture capital firm with a couple of partners and helped even more businesses get off the ground.
Then I decided to roll up my sleeves and get my hands dirty. Over the past 30 years, I have either founded or worked at seven small or startup financial services firms. Some succeeded. Some failed. It added up to a lot of blood, sweat and tears.
I’d like to share some of what I learned the hard way, so you won’t have to.
The Allure and the Reality of the Entrepreneurial Life
I’ve always loved working in the entrepreneurial world because it allows you to paint on a blank canvas. You can start with a picture in your head of what you are trying to create and use your imagination, your ingenuity and your effort to make it come to life.
Steve Jobs said, “Why waste your time living someone else’s life when you can create your own.” This is a glamorous idea. Blow off corporate America and take charge of your destiny.
But successfully starting and growing your own firm is mostly not about glamour. It’s about translating your vision into a plan and then executing that plan. As I said, it’s hard work.
The facts are grim. According to the Small Business Administration:
- 20% of new businesses fail in the first year
- 30% will fail by the end of the second year
- 50% will fail in five years
- 66% will fail in 10 years
- 75% will fail in 15 years
What causes those failures? Here are the main reasons, according to the SBA.
- No market need
- Not enough capital
- Not the right team
Certainly, most business failures qualify for one of those tidy labels. But I think there is often another underlying cause that many business failures have in common. Those who start down the entrepreneurial path are simply not mentally prepared for the difficulty of the journey.
Knowing What to Expect
Being ready for the emotional roller coaster you will inevitably encounter is a key to success. I’d like to share my perspective on what that ride looks like.
As I’ve experienced it, the entrepreneur’s emotional roller coaster has four phases. You will cycle through each of them many times. How long you spend in each phase will depend on circumstances and your personality.
Here are the four phases:
- OMG what have I done?
- Putting your head down
- Hey, this might work!
The first and most pleasant part of the ride is elation. This part is easy to deal with—everyone loves elation.
You start with nothing but a handful of ideas. You’ve talked to your spouse and friends about these ideas until they’re sick of hearing about them. And you’re sick of talking about them.
Now you’ve finally taken the first concrete steps to turn your ideas into reality. You see the fruits of your labor for the first time. Your creation has come alive! Elation prevails.
The joy of accomplishment has two components. First, there’s the sense we get when we see the tangible results of our efforts. We feel pride and satisfaction that our efforts paid off.
But there is also the feeling that we have purpose. Someone needed what we had to offer.
The feeling of elation that comes if we accomplish something as part of a team is even greater. Although it wasn’t solely our accomplishment, working together with others can amplify the elation. Somehow by sharing the joy it seems there is more of it.
Oh My God!
On other days, the reality of your situation sets in. The world wasn’t just sitting around waiting for you and your new firm to show up and solve its problems. You’re excited, but beyond your family and a few friends, no one else cares about your ideas, your passion or your success.
Nothing comes easy. Nothing comes quickly. Sometimes nothing comes at all.
You shake your head in disbelief and ask yourself, “What was I thinking? How could I have ever imagined that this would work?”
The crushing weight of responsibility comes down on your shoulders. You put your hard-earned money into this firm. Maybe you took money from others who trusted in your vision and your ability to get it done. You put your reputation on the line.
You can see it so clearly now—it’s all going down the tubes. All the time and effort you put into creating your plans was for naught. The world is simply going to ignore you. It’s not even going to take the time to laugh at you.
So, there you are, feeling like a fool and imagining yourself as a resounding failure. You’re naked and alone with your shame and humiliation. These can be dark times.
Getting on With It
But then you realize that if you just sit and wallow in your negative thoughts, the worst will definitely happen. But you don’t have to let it. You can put your head down and get to work. No one will come along and save you, but you just might be able to save yourself.
Buried deep in Theodore Rubin’s book Overcoming Indecisiveness: The Eight Stages of Effective Decision Making is one of the most insightful observations I have ever run across. It’s contained in a short chapter that is less than one page long. It’s called The Big Fact.
The Big Fact is that for 90% of the decisions we make, there is no right or wrong answer. Instead, the success of our choices is determined by how committed we are to making them successful after we make them.
This leaves you with a big responsibility. You can’t just quit when you face hardship and excuse your failure on making a bad choice. No, you must keep going because your success or failure is determined by your own efforts. There is really no choice. You must carry on.
Take a deep breath. Identify the obstacles to your success, one by one. Put together a thoughtful plan for overcoming each of those obstacles. Get moving and forge ahead.
Realize and accept that this will be a painful process. There’s no avoiding it. Pushing a boulder uphill is hard, grueling work. But if you do it …
There’s Light Ahead
… you just might get to the next phase of your emotional roller coaster—the moment when you look up from your efforts and say to yourself, “Hey, this just might work.”
You’re not quite there yet, but you can see the summit. It’s no longer a question of if your plan will work. It’s simply a question of when.
This realization may tempt you to cycle back into that feeling of elation I described earlier, but don’t do it. You still have work to do.
Now you are so close to success that if you screw it up you will really feel bad. You had success in your grasp, but you lost your focus and started celebrating too early.
Resist the temptation. Stay focused. Stay intense. Execute your plan now and celebrate later—you are almost there. Keep the champagne on ice just a little longer.
And the Cycle Continues
Actually, you are probably not almost there. You still have a long way to go. But you need to ride the waves of optimism whenever they come.
More likely, you will repeat this cycle of emotions many times on your journey. These emotions will become like old friends to you.
If you’re lucky, you’ll spend more time with your friends Elation and Hey, this might work! You’ll learn to keep your head down more, and you’ll have fewer of those OMG moments.
At some point you will realize that what you imagined was a destination is really a continuous journey—an ongoing series of victories and challenges. If you keep your head down, your victories will be larger and more frequent than your challenges.
What You Can Do to Enjoy the Ride
As you navigate between your challenges and victories, keep this in mind. Your experience will largely be determined by your attitude and behavioral choices, not the brilliance of your plan.
Take a break occasionally. It’s a long, hard journey. Starting and growing a business is an endurance sport, not a sprint.
Communicate with others about your stresses and challenges. You’re not doing your teammates, your family or your friends any favors by holding your feelings inside yourself. Respect them by showing them that you believe they are strong enough to share the burden.
Make sure you spend time with your friends and family. They are good medicine and can be an important source of comfort and support. Don’t obsess about your business to the point where your important relationships suffer and you end up successful but alone.
Keep perspective. The road to success is littered with failure. Failure is just another word for experience. Build on every experience and be grateful when they culminate in success.
Be joyful. You are engaged in an act of creation. You are striving. You are not a bystander. You are the man or woman in the arena. You have much to celebrate.
Your joy will attract others, and you will certainly need their help on your journey. Create a positive experience for them. Share your elation and lift each other up on those OMG days.
Have a bigger purpose that everyone can get behind. If it’s all about the money and the trappings of success, you are heading down the wrong road.
Be the sole judge of your own success. Whether someone else views you as a winner or a loser by some standard they set is of no importance.
It may be a wild ride, but if you are prepared, you’ll survive the first years of growth and create a rewarding experience for yourself and everyone who shares it with you.
Scott MacKillop is CEO of First Ascent Asset Management, the first TAMP to provide investment management services to financial advisors and their clients on a flat-fee basis. He is an ambassador for the Institute for the Fiduciary Standard and a 45-year veteran of the financial services industry. He can be reached at [email protected].