Starting a business is a leap of faith. Although we don’t know where we’ll land, we take that running jump. But why do we do it?
Ask 10 entrepreneurs why they what to start their own business, and you’ll get 10 different answers — some better than others. Maybe they hate their corporate job, and they’re sick of working for “the man.” Maybe they want to make a difference or pursue a childhood dream. Maybe it’s all about the Benjamins.
Although everyone has a personal story about why they want to start their own business, all of these reasons tend to fall into three categories: money, control, and passion. These motives will often tell you a lot about whether or not a person will be successful.
As with everything, there are strengths and weaknesses to each motivation. Read on to make sure you’re taking the leap with the right reasons at heart.
3 Reasons Why People Start Their Own Business (And What Can Go Wrong)
Money is, obviously, a huge motivator, and it’s clear to see why entrepreneurship seems appealing to those people who want to ascend to the upper economic class.
Americans love a “rags to riches” story about an inventor, a leader, or a visionary who pulls him/herself up by the bootstraps. A lot of us fancy ourselves to simply be “temporarily embarrassed millionaires.”
However, if you’re motivated by money, beware of survival bias. We hear a lot about the thrills of success and the underdog who strikes it rich, but there are many more stories of failure and financial ruin that aren’t told.
The truth is, entrepreneurship is risky. In fact, 50% of small businesses fail within 5 years. There’s no guarantee that you won’t end up years older and thousands of dollars poorer after it’s all said and done.
Honestly, there are much easier (and predictable) ways of becoming comfortably rich than to start your own business. If you only care about the money, your best bet is to work in a profitable field like healthcare or engineering where you have stable working conditions and a steady source of income.
That’s why I am immediately skeptical of someone who becomes an entrepreneur to make money. After you’ve experienced your first failure, and all the money is gone, what will keep you motivated?
Being your own boss sounds glamorous. You get to make your own hours, work only with people you like, and manage your business however you want.
Complete freedom as an entrepreneur, however, is a myth.
You have to answer to your employees, clients, investors, and customers. If you fail to do so, you won’t be in business for very long. The customer, in particular, holds the key to your success. They decide whether or not you get paid. In some ways, this can make you feel even more out-of-control than if you were working for a traditional company with a reliable income.
If you have employees and hit a rough patch, you may have to forfeit your own paycheck to make sure they are taken care of. If an employee gets sick, you have to be the one to cover for them.
Will you need startup capital? If so, you’ll also have investors to consider. You’ll need to report to and consult with them regarding significant developments. In fact, making investors happy will take precedence over making yourself happy.
Don’t get me wrong, running your own business is a great feeling, and it does come with a feeling of power and agency. However, you can’t forget that you have an obligation to other people that must be met, even at your own expense.
Maybe you want to open a restaurant because you have fond memories of cooking Sunday dinner with your grandpa. Maybe you want to create a piece of tech because you think it will improve the lives of others.
I, personally, think that passion is the key thing you need to start a business of your own. However, it’s important to shield yourself from being blinded by it. Keep in mind that, above all, a business must be profitable. It’s an awesome feeling to wake up and do what you love every day, but don’t let it distract you from your bottom line.
It’s not uncommon for an entrepreneur to fall in love with an idea, put all their efforts into making it a reality, then find out that there’s no market for it. It’s difficult to admit, but just because you love your passion project, doesn’t mean that anyone else will. Don’t forget to ask the basic question: “Who is going to buy this?” Do your market research, and continue to test your product as you develop new aspects of your overall project.
Be realistic and honest with yourself. Passion is a great thing, but remember to look where you’re going while you have your head in the clouds.