When you consider starting your own business, you will probably have limitations to what you can and want to do. You only know what you know, you may already have a busy schedule managing your current job, you only have limited financial resources (great for you if you don’t!), and you still want to spend some of your time with your family, friends, hobbies, and so forth. Congratulations, you too see to be human!
For most of us the driving force behind our journeys to our first millions is the search of happiness: we believe that this journey for it’s part, big or small, will make us eventually happier. Sure, it will require some sacrifice and tons of hard work too, but at the end we believe the results will please us and thus get us higher on our scale of general happiness. The sacrifice is thus justified by the outcomes, we believe.
I think this logic is solid, as long as we carefully balance what we sacrifice, exactly, and to what extent, and against what benefits exactly. While the final judgment here is very personal, the key is to know yourself and be very clear about your values and limits. It is easy get self-centered and greedy, and while that’s a great way to stay focused, it’s an even greater way to end up in utter unhappiness despite great results.
Besides keeping tabs of the sacrifices we really want to make – especially the ones that affect others around us – we also need to be very conscious and aware of the risks. We should not be afraid of risks, quite the contrary, but being aware of them ensures we can mitigate them. Jumping into deep water might be OK as long as you know you can swim a bit and if there’s a life vest available as soon as you need it – if you need it. Planning ahead (especially planning for the worst case scenarios), selecting the right circumstances, and making preparations to match both your strengths and weaknesses is what will keep you from drowning when you jump.
If you have enough experience (or data) and skills to simulate your finances before you get started, by making simulations with pessimistic, realistic, and optimistic assumptions you can get an idea of what you can expect in good times and bad. For me this is part of the essential preparation and planning before setting up your business. This also allows you to already start testing your ideas regarding how to make the best of those bad times that will also come. In a similar way you can already plan how to best take full advantage of the booms that you too will benefit off every now and then.
So concretely, to save ourselves from drowning – and sinking our new businesses too – we need to plan in advance what we can and cannot do, and what we want and definitely don’t want to do. Starting from the business ideas themselves, we need to choose something that matches our interests, the skills we have and can acquire, the time we have available now and later, the financial resources we have, the opinions of our spouses or other near family, and so forth. This of course makes it more difficult to find a viable business idea, but it is necessary, as otherwise the chance of a dramatic failure is all too real.
When I was seven years ago trying to decide on a business for myself, I initially had a long list of ideas, and all of them seemed to be either unsuitable or just plain bad. Some of them appeared to have low profitability, others require things I couldn’t or absolutely wouldn’t want to do have, and yet others were such that my wife totally hated them. Also many of them were such that I could not have pulled them off while staying in my corporate job. This meant they were out of the question for me, as I still needed the stable income of my job in order to support my family, especially as I had limited savings to rely on. All this felt tough at the time, but forced me to keep searching and generating new ideas until I found that one that was right for me. I’m so glad I kept searching and found “my thing”, as all of my other ideas would have seriously compromised something that I really didn’t want to compromise.
Similarly, when I was doing all the planning and data gathering for my real estate business, and when I was trying to quickly learn as much I could by reading tons of books on the topic, I was really anxious to get going and get my venture flying, off the drawing board. Luckily, it took me much longer than I expected to take the concrete initial step – buy my first property – and I feel blessed about the time this gave me to prepare for it. By the time I made the purchase, I had been studying, planning, and preparing everything for about 9 months and was therefore really well prepared and ready to succeed in what I was starting. This way my situation was very different from what it had been less than a year ago: I had already had the idea and the readiness to pretty much just jump in no matter how little I actually knew. Lucky that I didn’t have the money, so that I just had to save more and meanwhile use the time to learn and plan properly.
How much risk should we then take, and how do we know whether it’s time jump in or time to still plan some more? Of course these are ultimately judgment calls we all need to make for ourselves, but my criteria are these:
- It’s time to go back to the drawing board to work on the idea and prepare it some more (or maybe dump it and try something else) if
- my worst case scenario could totally sink me – financially, family-wise, time-wise, or other ways OR
- o my spouse – or close friends who know me very well and have well-balanced opinions – ask questions that make me seriously wonder about some aspects of my plans OR
- I wonder myself whether my plans border my limits, whether financial, work-load related, ethical, or others OR
- I don’t really feel exited about my plans
- It’s time to jump in and get your business started when
- none of the criteria above apply AND
- the realistic scenario for your business fulfils your financial and other requirements
Another point worth a special mention is starting a business while keeping a previous full-time job. It’s very common and that people initially keep their steady jobs when starting up their own business. It gives them a chance to see whether their business goes as planned and provides stable income through the infancy of the start-up – and even beyond if necessary. It does have its down-sides too, though. Working 40-50 hours a week in your regular job and then spending evenings and weekends on working your own business can be very taxing. Not only do the hours shoot through the roof, but it’s also challenging to try to focus on your day job when there are be so many exciting things to do and achieve around your start-up.
Given these challenges in, most of us will eventually have to ease up a bit – or a a lot – on one side or the other to keep it reasonable. This is perfectly OK as long as you get the timing right (don’t fall between the chairs please!) and find an arrangement that works for you and still gets you to your goals. Balancing is the name of the game here too. Sometimes I meet people who want to jump head first to their new business, being so excited about it, and are ready to quit their jobs even before they have gotten the business started. That’s fine if you have other sources of income providing food to your table and making sure your bills keep getting paid. And if you don’t, just accept this as one of your limitations and find a way to get your business started without quitting your job yet. The time will eventually come – but for now it’s just wiser to stay put.
So, there you go: you will be successful if your idea is realistic and feasible in your circumstances, if you choose something that you are passionate about, and if you execute on it in a way that respects your realities. Remember, you are setting up for a marathon, not a 100-meter dash. If you need to stay in your job, then do so and find something that fits– you’ll anyhow get a chance to quit your job later. If your family does not like your ideas, or if you simply don’t feel excited about a potential business, search some more and find something that really suits you. While it may be that you’ll never find a 100% match, I’m sure you can find at least a 90% one, and as long as nothing really essential is missing or wrong, then that’s the one you should go for!
Are you wondering about business ideas of your own right now and trying to decide whether to jump or whether to stick to the drawing board? Are you hesitating what to do because you have a great idea but some of the risks feel too scary? I would love to hear your thoughts and comments on these things!
Oh, before I forget: I do know not everyone wants to set up their own shop, and yes there sure are other ways too to invest successfully. I’ll get back to these other aspects of investing in my next posting, with a focus on ways to get reasonable returns while keeping risks under control. Until next time!