Friday, February 27, 2009

So You Want to Open Your Own Business

The 2/23/09 WSJ had a special report on small businesses, titled, "So, You Want to Be an Entrepreneur." It listed ten questions to ask yourself before becoming self-employed. Here are the two most relevant questions to ask:

1. Are you willing to sacrifice your lifestyle for (potentially) many years?
2. Are you a self-starter?

I found the WSJ's report timely, because I have a friend who left a well-paying job to go into business for herself, thinking she would be highly profitable the very first year. After over a year in business, she is becoming discouraged by the fact she made only $20,000, mainly from activities unrelated to her core business. I wish my friend had read the WSJ report, which warns, "Entrepreneurs frequently won't pay themselves a livable salary in the early years...until their business is financially sound. That can take eight years or longer."

From my battle-tested perspective, I think my friend is doing very well if she made $20,000 her very first year; however, because she made $80,000 in her old salaried job, she feels frustrated. If you're founding a business, it will take two years to lay the groundwork to get a consistent book of business. I don't care if you're doing law or construction--it takes time and money to advertise and get clients to recommend you to their friends. Think about it--would you recommend someone who hasn't been around for at least two years? Here's my advice: if you want your business to succeed, you need to first save enough money to last at least two years. Then, you need to make sure you're comfortable with the idea of not making a dime until the third year.

But it's question #2--whether you're a self-starter--that really grabs my heart. I call this the Mariah Carey/Chumbawamba rule, after two great songs by the aforementioned artists--"Shake It Off," and "Tubthumping." Basically, my rule is this: The last person standing wins. Therefore, if you want to be a successful businessperson, you need to be able to shake off failure, get back up again, and keep going forward. If you're ultra-persistent, you'll probably succeed. For example, an ex-girlfriend once called me a George Foreman lawyer--I don't have much style, but I just keep coming at you. Unless I run into a Muhammad Ali, chances are, I'll be the last man standing.

The WSJ has a curious term for this attitude--"hypomania," taken from John Gartner's book, The Hypomaniac Edge. The book "theorizes that many well-known entrepreneurs have a temperament called hypomania. They're highly creative, energetic, impatient, and very persistent--trait that help them persevere even when others lose faith." [Emphasis added.] I agree wholeheartedly, and I'm glad there's a positive name for my impatience and energy. Let the hypomania begin.

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