Leaving a Steady Paycheck to Be An Entrepreneur

Someone recently posed these questions to me:

"If you didn't have the means (financially) by which to pursue an entrepreneur's lifestyle and build your own business, would you still do it?"

"If you still worked for a corporation, would you still pursue an entrepreneur's lifestyle and build your own business?"

Photo by divemasterking2000

I've been pondering these two questions for the last few days.  The short answer: Yes and maybe.

While the general population asks:

"What do I currently have that I would be at risk of losing?"

Most entrepreneurs are driven by:

"What do I stand to gain that I currently don't have?"

The difference in mindset is striking, isn't it?  You could sum it up with the polarity of Scarcity vs. Abundance thinking. I think that would be glib. There's more to it than that.

When I started my business in 2003, my husband, who manages our finances said to me, "We have enough to live on for 2-3 years. Focus on building your business and we'll do just fine."  That timeframe included burning through our 401K savings, which many people consider untouchable until retirement.

Would I have still started a business in 2003 after getting laid off, if my husband hadn't reassured me on the financial front?  Yes, absolutely.

The financial cushion made it easier, because it gave me more time to build my business.  But I would have made the leap to self-employment anyway. Why? Because my drive to gain what I didn't have as an employee--full creative expression, control of my own destiny, the satisfaction of matching my gifts and talents with the marketplace needs, and freedom, sweet freedom--overshadowed any fear I had of losing what I had at the time. My nod to less money in the bank: I would have been more aggressive in creating a revenue stream from the get-go.

Photo by ClickFlashPhotos

In fact, other than money in a 401K, I didn't have much to lose when I started my business 6 years ago. I didn't have a job. I didn't have status. (When you are unemployed, you automatically lose status, no matter what title you held previously). I didn't feel that I was at risk of losing my identity, as I had been transitioning out of engineering for a couple of years by then.

As with many other things, YMMV (your mileage may vary). If you require a bank loan to start up your business, are you willing to lose your credit worthiness if things don't work out? If you're used to a certain standard of living (e.g., vacations abroad, expensive dinners out), are you willing to change your lifestyle?  If you have two kids in college, are you willing to have a family discussion on alternative ways to fund their education?  If you have a spouse who is not supportive of hanging out your shingle, are you willing to work through the consequences?  None of these were issues for me, but they may be for you.

Another way to look at this decision of becoming an entrepreneur:

What's the opportunity cost?  

If I stick with being an employee, what will it cost me in terms of professional growth, satisfaction, new relationships, personal development, lifestyle, and yes, money over the long term? 

Not everyone is cut out to be an entrepreneur. If you have even the slightest inkling that running your own show is something you would enjoy, you owe it to yourself to consider the opportunity cost of staying with the status quo. I'm fond of saying to individuals who are on the fence to committing and moving into action on something important to them,

"You don't have time to waste."

My friend, Ilene, taught me that lesson. Before she died in 2006 of ALS (aka Lou Gehrig's disease), she relayed a story of training new coaches and watching their reaction to her deteriorating sense of balance and strength in her legs. She proclaimed wisely, "I'm the lucky one. I know that my time is limited. You are still under the illusion that you have all the time in the world." How true, dear Ilene. How true. Photo by littledan77

I'd like to expand on my answer to the second question,

"If you still worked for a corporation, would you still pursue an entrepreneur's lifestyle and build your own business?"

The short answer is: Maybe.

If I still worked for a corporation, in this economy, I might be able to employ my entrepreneurial instincts inside a company. Hard times, painful conditions, often breed innovation, because the old ways don't work anymore. Maybe I'm being an idealist. Depending on the company and the top management, you may get the chance to help reinvent an existing company. That can be just as exciting and satisfying as starting your own.

On the other hand, if I were working for a company where the management was clearly going the death march route (think: newspapers who haven't come up with a new business model), I'd be the first one to create Plan B. Better to throw my lot with my own creative resources than to bet on a dying paradigm. Photo by tommy THE pariah

If you are contemplating the leap to become a solopreneur/entrepreneur, what are your biggest fears? What are you at risk of losing that you currently have? And what do you stand to gain by taking a new path? 

If you are a fellow entrepreneur, how did you make the decision to start your own gig? Leave a comment below.

Comments

[deb]

Guess what? I'm thinking of it again ... and it scares the livin' bedoobedoops out of me. (there, i said it) (even though i said 'bedoobedoops' and not what i'd normally say ... this IS a PG-ish blog, isn't it?) ;)

I DID make a mess of my credit and my savings and my standard of living last time I undertook the big E, so I know I'd need to be smarter, but ... I'm not sure I'm smart enough. Still, Ilene's death, my mom's death, these sorts of things all add up to a fire under the butt, don't they?

(stay tuned my friend!) :)

[Carol Ross]

Trust me, Deb. You ARE smart enough. Entrepreneurship is about trying stuff out and learning from the results, quickly. Fail fast, fail often. Get the bad stuff out of the way so that you can move on to the good stuff.

Sounds like you learned some really important lessons last time around that will serve you now.

I think a more pertinent question is: Are you fearless enough?

Entrepreneurship requires the willingness to be lost in the woods, not being able to see the path fully, and lacking a clear route, just putting one foot in front of the other. There are snakes along the way, for sure. But with an observant eye (and maybe with a little help from your friends), you'll spot them before they bite. My advice: put together a group of advisors and figure out what you don't have or know that you'll need for the journey.

Can't wait to hear how this unfolds....