Startup: An Insider's Guide to Launching and Running a Business (5 page)

Later, when money was much less tight, we still clung to that ethos—not spending money unless it was really required. Even when working in much larger organizations later on, I continued to default to at least examining the least expensive way to get every job done.

The contrary point of view to this is evident all around, however. I worked for a startup some years later that spent $80,000 on customer relationship management (CRM) software that it never used (the company had bought it before I came on board). From my point of view, that $80,000 would have been enough to start and build an entire new business.

There is a balance that needs to be found, however. You should
not
default to the least expensive option all of the time. Very often, the cheapest route is not the best way. More often, you are going to need to spend money to get what you want, and what you need for your business. The task for the entrepreneur is learning how to look into the details of a purchase decision and accurately project into the future whether there will be any real value created from each
and every significant expenditure—especially when you are just getting started. As success comes, or investor dollars head your way, cling to the ideal that each and every dollar is important and not to be squandered. Your investors will appreciate it and your company will benefit from it.

_________________

Impact to Your Personal Life

Starting and running a business will have a profound effect on your personal life. For many entrepreneurs, the business actually
becomes
their personal life. A new business is like a young child—it needs constant care. As with having a child, the impacts to your life are many and varied. Here are some observations from my experience that I did not necessarily understand before I got started.

Financial Strings Attached

When I started my second business, I did it with my friend Sterling. We were both surprised when my bank gave me $30,000 of credit on two credit cards—and we were not shy about using it. I was single at the time, so it was an individual decision that I did not hesitate to make. Fifteen months later, I got married. This was now a decision that had impact for my family, not just myself. The company was obligated to pay the debt back, which was an uncomfortable issue with my wife. She felt weighed down by the debt and poured the salary from her job as an IT consultant into the credit cards. It was a certifiably huge issue for us, and she is still a bit upset about it, to be honest.

In my mind, it was company debt, not hers or ours. In her mind, since it was in my name, it was our debt and it would drag us both down to the depths of the deep blue sea if we did not rid ourselves of it. In the end, we poured ourselves into the task of paying off the debt, and were then rewarded with a payback when we sold a spin-off business of our company to investors two short years later.

One clear pattern in the entrepreneurial world is that banks and traditional lending institutions are rarely, if ever, interested in backing an early-stage or small business without having an owner or principal in the company signing on the dotted line and taking personal responsibility. Just move forward expecting
that banks are not going to loan you money without a personal commitment—they need somebody willing to put their butt on the line in case the worst happens later on. This is a significant barrier to starting a business, and should not be taken lightly.

Bankruptcy is a serious reality, and something that happens frequently enough to new business owners that you should consider carefully before plunging in and taking on debt.

Life on Hold

When you are starting a business you will find that many other important parts of your life are put on hold when you are in the early stages. My friends in Kansas City, who own an IT services company, are still wondering after seven years when they are finally going to get landscaping installed in the front yard of their home. Apparently it’s been an embarrassing mess for years now.

They had a successful and growing business, but that business had been financially needy for years and is just now pulling them out of the debt they took on to start it. For them, it is a reminder of their sacrifice when they come home every evening and see that the front of their house remains bare, without the simple plants and flowers they have wanted for years. Simple? Yes. Important? Yes, of course it is. Little things can add up.

One entrepreneur that I know very well has spent so much time focused on building his business that he has put his social life on hold. He has deeply desired to be married and start a family since I have known him—over 17 years. That being the case, in his mind there has never been sufficient time even to give himself the opportunity to meet a girlfriend. The chain of business after business being set up has been all-consuming for him, and has taken over his life. In the month-after-month, year-after-year chase, through the emergencies, negotiations, operational problems, and everything else that his businesses demand of him, he emerged over a decade later still chasing the dream, and still single. It is not a matter of being blind to the passage of time and the sacrifice, but more that he has
constructed a mental place
where for years dating, finding a wife, and starting a family all
felt
impossible given the depths of the responsibilities he carried.

Time

First off, as an entrepreneur you don’t often have to answer to other people for your personal time. You answer to yourself. This is fantastic if you are able to focus, and are internally driven to take each day’s step in fulfilling your vision of a successful business. However, this can be disastrous if you are a procrastinator. Because you are not going to have the psychological pressure of somebody looking over your shoulder and telling you what to do, it is easy to lose track of what you are supposed to do. Don’t let that happen.

In a traditional job, employees are expected to work from 9:00 a.m. to 5:00 p.m. with a one-hour lunch break, Monday to Friday. Vacation time will increase as the number of years with the company increases. Sound familiar? The pattern is familiar to all of us: get up in the morning, go to the office (busy time), come home (free time), and repeat the next day.
Figure 1-1
shows what your free time looks like in a visual form.

Figure 1-1.
How you spend your time when working as an employee

When you work in a traditional job, it is easy to fantasize about how much free time you would have if you worked for yourself. You can show up when you want, nobody will bother you if you take a three-hour lunch break, and nobody will bother you if you go home early. That’s right! Nobody will care if you don’t even show up at all! Sounds fantastic!

It is true that nobody will care if you are in free-time mode when you go out on your own. The problem is that if your business is not yet fully fledged, it will shrivel up and die quicker than a tulip in Death Valley if you are not careful. The truth of the matter (and something that many first-time entrepreneurs are shocked to learn) is that most self-run businesses demand much more time than any traditional job (
Figure 1-2
).

Figure 1-2.
How you spend your time as an entrepreneur

The fact is that because in the beginning
the business is you
, you are never away from it. With a nine-to-five job you can
usually
turn off the noise of the office and unplug when you go home. When you own your own company, there is
often no such distance to be found by returning home. If you are a full-time entrepreneur, psychological distance is very hard to achieve because you have to make the business work to pay your rent and put food on the table. It is very hard to take the afternoon off and enjoy a movie if you know that that time could be spent doing what needs to be done for the business. Always the business! The business will perpetually be waiting for you to take care of something. This will continue
until
you reach the milestones of
self-regulating
and
self-directing
, which I will talk about later in this book.

Impact to Your Health

Many people who get on the entrepreneur bandwagon often do so at the expense of their physical well-being. I know a number of businessmen who let the demands of being The Decider serve as an excuse to delay physical activity until later on—day after day. This translates into not exercising at all, and weight adding on pound by pound. What follows is the familiar refrain that “I am too busy, so there is no choice!” Bull.

Don’t let your business keep you locked up. You are better off deciding to take care of yourself. Exercise and a good diet are the fuel for your body and mind. The business needs a vibrant and fit leader more than it needs that extra 90 minutes from you three times a week. Get out of the office and exercise. Find something cardiovascular and repetitive that will allow you the quiet time to reflect on your business and the market environment from the distance of a running track, hiking trail, or lap pool. The time away from the office, along with the physical stimulation, is perfect for activating your subconscious mind and triggering your creativity. The work that you were focused on in the office will come back to you with a new perspective and a new clarity if you deliberately create distance from it. Also, a healthy and vibrant CEO is more likely to interact successfully with other businesspeople. Like it or not, the CEO crowd at the highest levels tends to be healthy and athletic. Go ahead and join the club, and don’t use your busy schedule as another excuse for not taking care of yourself.

Resources

Anything that is yours might end up in service of your business. The boundaries between office and home blur. Tools from the garage? They are at the business, having been used for the thing you were doing last week. Papers on
the kitchen table? Those are from the marketing campaign we are putting together.

In my case, I ran an office out of my home for several years. My partner had database servers running in his spare bedroom at one point (the electricity bill went up by hundreds of dollars per month that summer). At another time, we had my business partner’s garage stacked floor to ceiling with pallets of merchandise that we had manufactured in China. That garage was so full that he was worried that the foundation of his house was going to crack.

So, impact to your personal life can be wide and varied. In fact, seeing the wide range of areas in this discussion, we can come to the conclusion that being an entrepreneur is apt to affect every aspect of your life. This is not something that you can easily compartmentalize. When you are fully committed to a business, it will touch and affect every aspect of your life—your health, wealth, relationships, and everything in between. For those of you that are intrinsically motivated—that have to do it—it won’t matter. If this list of costs and pain points is off-putting for you, then that’s a good thing. Much better to find out from a book and decide that it’s worth avoiding than to commit to The Life and realize that it’s a bad fit.