To make a successful go at the startup life, you need the right mindset and environment. Here are five signs that entrepreneurship isn't for you.
As venture capital investing hits levels that were previously known only to the dot-com era, more and more people are striking out on their own as entrepreneurs. The startup ecosystem is booming, with unheard-of IPOs and acquisitions making national headlines proving it's a great time to be a startup founder.
However, the life as a startup founder is a rocky one. It can require more hours and more energy to produce fewer results. Suffice it to say, entrepreneurship is a journey that some people are not ready to embark on.
Here are five signs that you might want to stick with your day job and put your startup dreams on hold.
1. You don't have a support system
When someone comes to Jason Hogg, a professor of management at Cornell University's Johnson Graduate School of Management, wanting to be an entrepreneur, he always asks them the same question, "Do you have a support network (family, friends, spouse, colleagues) that supports you in taking this leap?"
In order to achieve success as an entrepreneur, you need to have an established network of people that are willing to support you, and that support starts at home. If you don't have support, especially from spouse, you could end up making poor decisions for the business based on personal reasons. You won't feel empowered by the people around you.
"You need professional and personal mentorship and community around you in order to have these types of communities grow. Because, without that, you're going to burn out pretty quickly," said Moj Mahdara, CEO of Made With Elastic.
Startup founders have to be ready to face defeat. James Sun, Chairman and co-founder of Anomo and a finalist on season six of The Apprentice, calls this the door slam effect. This is the same thing faced by people in sales and, without a support system, it will be a lot harder to keep that rejection from getting under your skin. Also, it's important to know there are people who believe in you and are rooting for you.
Don't underestimate the power of having people in your corner.
2. You have a paycheck dependency
"One of the first questions I ask all my friends who want to be entrepreneurs is, 'Are you ready to go without a salary for sixth months?,'" Sun said.
Sun's view might be hard to swallow, but it is realistic. Some founders take it even further than six months. Phil Dumas, of Unikey Technologies, waited until he had enough money saved up to go two years without taking a paycheck, and he ended up going two and a half years before he cut a check to himself.
As a founder, especially if you have other employees, your money is obligated to other people before it is your own. Sun said this is especially true if you are raising an early round of financing such as a seed round. If a seed or Angel investor puts money into an early stage company, they're probably going to be averse to you paying yourself with it.
According to Mahdara, would-be founders should be able to stave off their worries about more than just their paycheck.
"Whenever someone says to me that they're concerned about how they're going to get healthcare, pretty much lets me know that they are not an entrepreneur. I know that sounds really silly, but those are the kinds of things that, when you're starting a company, you just don't think about," Mahdara said.
Not only do you have to be willing to waive your paycheck, but you also must be ready to learn.
3. You're unwilling to learn new roles
Too many entrepreneurs set out to start a company with the view that they will be able to utilize their specific skill set. You're in for a rude awakening if you think you can start a company as just a developer, or just a marketing person.
"Another sign that you are not ready to be an entrepreneur is if you are wanting to stay in your functional expertise, and you want to hire everyone else around you to do things you don't know how to do," Sun said. "Because, obviously, as an entrepreneur you have to wear so many hats, and not even at a generic level. You actually have to be pretty good at wearing all the hats."
As a founder, you have to know what you are doing and how to do it. Startups can carry with them a volatile environment, without a guarantee that you'll be able to hire or retain someone to carry out a specific task. You have to be prepared to step in and get that task done if need be.
When Hogg asks prospective entrepreneurs his set of questions to determine their readiness, he said that being able to answer them, "requires broad thinking on a variety of subjects and an ability to succeed as a generalist."
4. You believe the myth of entrepreneurship
The great myth of entrepreneurship, according to Sun, is that you are working for yourself. Let's get this clear right now, even as a startup founder you are not your own boss and you probably aren't working for just yourself.
"As an entrepreneur you are working for investors, you are working for your stakeholders, you are working for your employees — not for yourself. In fact, it comes with more attachment and more accountability," Sun said.
According to Mahdara, that accountability can be a rude awakening to people who have a misguided notion of what life is like as an entrepreneur.
"You are accountable for everything, you pay yourself last, you take time off last. It's a huge privilege, but it's also a huge responsibility," Mahdara said. "And, I think most people have a fantasy about making your own hours and deciding who you get work with and when you want to work. There's definitely a lot of freedom in it, but that freedom comes at a price."
Unless you are planning on bootstrapping with your own money, you will be answering to other people on every move you make. What you need to remember is that the second you take capital, or trade equity for anything else, you are accountable to other people. Special consideration should be paid to your investment team as there is a timeline on your ROI and you can't fire your VC. This isn't necessarily a bad thing, as VC firms often bring valuable business expertise that can help you be more successful.
5. You lack business sense
Startups are often unpredictable. As such, many founders believe that they do not need a formal understanding of traditional business theory and practices. Unfortunately, this couldn't be further from the truth. While your goal might be to build a revolutionary product or service, you will need to be able to build a business around that product or service if you want it to gain traction.
"Do you have a clear plan to get started and what are you going to do when things go wrong, because they inevitably will? How are you going to get customers and how will you generate revenue (e.g., what's your business model)? And, how much money do you need to get to a proof point? If the person doesn't have the answer to many of these questions, they have some more work to do before taking the leap into entrepreneurship," Hogg said.
Do all you can to learn the business aspect of things. Do some reading, and try to map out how your contemporaries took their product to market. Meet with a financial expert to get an idea of what kind of money you'll need and develop a plan for how you'll spend it.
Both Sun and Hogg agree that the best way to get prepared, and give yourself a realistic view of life as a founder, is to work with an entrepreneur — volunteer, shadow them, etc. Especially in the first days of their company, before they have raised money, and go to investor meetings with them. This will help to set your expectations for your own journey.
"It's very telling how difficult the journey is, and realism will definitely kick you right in the ass," Sun said.
Hogg describes the entrepreneurial journey like so: "It's like trying to prepare for Space Mountain [at Disney World]: You know you're getting on a rollercoaster but the whole thing is in the dark and you don't know when the turns are coming," Hogg said. "If you're averse to risk and really don't like to be in a dynamic environment, don't get on the entrepreneur rollercoaster. The best way to prepare is ask someone who's been on the ride."