This article originally appeared on Quora: What’s the hardest step in the employee-to-entrepreneur transformation and how did you overcome it?
For myself, I don’t think of the transition as a single hard step (or one that was the hardest), but a series of steps or challenges that got harder as I went. Everyone thinks life will be so much better as an entrepreneur, but the reality is the only easy day was yesterday.
- Making the switch: The first hurdle (and the one that stops many people), is just making the transition from employee to entrepreneur and giving up a regular paycheck, paid benefits, and paid vacation. All that is gone. If you don’t work, you don’t eat. I was fortunate that I was able to start my business part time until I was making enough revenue to afford to quit my job and work on my business full time.
- You get paid last: Everyone thinks entrepreneurs are rolling in money. I laugh when I see an infomercial with someone saying “I made $40,000 in one day”. Yup, I did to – and $39,950 went out the door the next day to pay the overhead and keep the lights on. All the bills (and the employees, and the government) get paid before you do. You may wake one morning to discover there is no money left over to pay yourself, and your lowest level employees are making more than you – and that can go on for weeks/months/years. It is very demoralizing. I don’t know how to tell you to get over that, other than to keep working on your business, manage your cash flow, and hire carefully.
- The buck stops with you: The next big transition is coming to grips with “its all you.” You get all the credit and all the blame. You don’t have a boss to drive you, and have to kick your own butt every day, stick to your work hours, drive yourself forward when you’re tired, try to not get depressed, and avoid burnout. It all catches up to you. There is no one else. That also means you don’t get to pick the problems you work on – you’re it. Don’t file those regulatory forms on time because you were exhausted and forgot? Enjoy the expensive fine, and depending on what you neglected to do, maybe face jail time. Claiming “you didn’t know about the requirement/law” doesn’t work well with a judge. This is where having the right advisors come in: accountant, lawyers, HR consultant, and a mentor/coach.
- You are responsible for other people’s lives: Having employees is a huge responsibility and regulatory pain. It actually gets harder not easier when you add employees because now you have to look after them too. Pick the wrong employee healthcare plan, and your employees families will suffer. Screw up your cash flow and you’ll have to tell your people you can’t make payroll, or worse – you have to lay them off. That devastates families, many of which are a paycheck or two away from ruin to start with. Firing people who screw up is easy. Firing good people who did nothing wrong because you screwed up as a business owner is probably the worst feeling in the world.
- The bigger the business, the more headaches: When you start, you think if I can only get to this size, everything will work out and I’ll have it made. Nope, as the business grows, things get more complex, the headaches get bigger, and your job gets more demanding. Grow carefully.
- You are the constraint: Bottlenecks always happen at the top, and its a hard thing to swallow when you realize you are holding the company back because either you have blind spots and can’t see the change, or are afraid to embrace change. A board of advisors is key to help push you further along, ideally made up of other seasoned entrepreneurs or retired executives. You have to grow and learn constantly.
- No one tells you the truth: People have been conditioned that bosses often shoot the messenger that brings bad news. Things will get glossed over, or hidden in the hope you won’t find out. No one will tell you you’re screwing up or your ideas are stupid. The employees will all laugh at your jokes, and try to be your buddy and make you feel popular. Some will even flirt with you, or worse. Beware, this could cost you your business. Constantly talk to your customers to find out how you’re doing – you’ll learn the most from your toughest customers. Talk to other entrepreneurs to find out what’s working for them. Again, your board of advisors is key to keeping you moving in the right direction.
- People will try to get one over on you: Many entrepreneurs start out with the grandiose idea of creating the perfect company where employees and customers are like family – and that’s great. But not every employee will see it that way. Your employees will walk of with equipment, slack, cheat on their time sheets. Your suppliers will short you, or prioritize someone’s order over yours. Your customer will take forever to pay, or find a reason to refuse to pay. Someone will sue you. Someone will vandalize your building. Your landlord will come up with some new fee. Some inspector will tell you you are out of compliance when you’ve passed a dozen inspections without incident. Your insurance rates will go up for no reason. Everyone has their hand out wanting something from you. Sometimes they ask, sometimes they just take. Don’t take it personally.
- You’re the Cheerleader in Chief: Tired, burned out, exhausted, stressed, had a long day? Too bad, so are your employees. All of them. And they need you to get them energized, to see the possibilities not the obstacles, to believe they can win, that you’re all going to succeed. You better be the hardest working person in the business because your people won’t work harder than you. You can’t lead from behind a desk, so get out there and lead and inspire even if you’re down in the dumps. Whatever happens, whatever it takes, grow and inspire others. Never let them see you stress, lose your temper, or lose control.
I could go on, but I think you get the picture. Hopefully, none of this will dissuade you from becoming an entrepreneur. If you’re up for the challenge, knowing what lies ahead makes it easier to get your head in the game. I’ve heard so many entrepreneurs say they wouldn’t have started if they knew how hard it was going to be. I think at some point, many entrepreneurs thought about cashing it all in and going back to the “easy life” of being an employee working for someone else. I know a few that did, but they didn’t last long – they missed the challenge and restarted another business within a few years. I think for many entrepreneurs, going from employee to entrepreneur was easier than trying to go back.
If thinking about the challenge excites you rather than discourages you, you probably have the mindset and spirit required to be a successful entrepreneur. The only way to know for sure if you can really swim, is to get into the water. Good luck!
Bernie Klinder is a entrepreneur, investor, consultant, and EMBA.