Life as an entrepreneur isn’t easy. Elon Musk, perhaps the most famous of the breed, often makes a fuss in interviews about how difficult his life is. He says that people imagine that they want to be like him, but if they knew the reality of his life – the stress, the missed family time, the fear – then they’d think twice. Just like other entrepreneurs, Elon Musk is a human being with the same needs as the rest of us. It’s just that he’s chosen to live a life that runs counter to what most of us want: peace, security, and happiness.
Avoidant personalities struggle with entrepreneurship. Being an entrepreneur is about being a leader: somebody who can make tough decisions to meet business objectives. Musk has had to repeatedly make tough calls throughout his leadership of both SpaceX and Tesla. It’s not something that can be skirted around – it comes with the territory.
So if you’re thinking about becoming an entrepreneur, what difficult decisions are you likely to face during your tenure. Let’s dive in.
Difficult Decision #1: Leaving Your Regular Job
Yes, there are a few examples of people leaving school and immediately launching their business ventures: Mark Zuckerberg, Larry Page, and Elon Musk spring to mind. But for the vast majority of people, entrepreneurship is something that happens part-way through their careers. For whatever reason, an individual becomes dissatisfied with the status quo and begins seeking opportunities to start their own firm.
To begin with, it’s a relatively low-risk activity. Most entrepreneurs start by exploring a hobby and then selling marketable products to the public. But after a while, if successful, the business grows into something much more demanding. All of a sudden the point comes when it’s no longer sustainable to carry on with one’s regular career. The needs of the business have taken over.
Leaving a career is a daunting decision. Once you quit a role, it’s often hard to imagine going back, especially if employers look for a continuous record. Taking the plunge and focusing on your business runs the risk of not being able to restart your career in the same position or salary.
Difficult Decision #2: Dismissing Employees
Entrepreneurs have to do what’s best for the company. Because of that, they sometimes must dismiss an employee. But dismissing a worker can be a difficult thing to do, even if they have done something wrong.
Workers can let you down for all kinds of reasons. They can break their contractual agreement with you, steal from your company, or behave in a way that isn’t consistent with company policy. Certain individuals can also undermine your team, whether because of personality conflicts or direct sabotage.
Often employees will try to put up an emotional defense to stop you from getting rid of them. But as the leader of your company, you need to make the right decision for all, not just your own emotional ease.
Just this last week, several high-profile entrepreneurs announced the need to lay off workers at their firms to retain profitability. Tim Cook of Apple said that his company would be laying off workers in some divisions. And Elon Musk said that Tesla would need to cut around 7 percent of its workforce to avoid bloat.
Difficult Decision #3: Committing To An Exit Strategy
Smart entrepreneurs know that success doesn’t last forever. Just look at what’s happened to firms like Apple and GE this year. What were once pillars of their respective industries now look more vulnerable in light of recent market changes.
Entrepreneurs need to know how and when to get out of a particular business to protect their own interests, those of their workers, and their firms in general. Almost no company survives in a specific market for decades on end, so planning for the closure of your company is almost as important as scaling up and making money.
Any smart entrepreneur knows that time is limited in particular lines of business. Companies in technologically disruptive industries, in particular, need to watch out. Changes in market structure can wipe out a firm’s value proposition overnight. Remember Nokia? Analysts thought that the firm would go from strength to strength, thanks to its domination of the mobile phone space back in 2006. Then Apple released the iPhone a year later, and the company tanked.
Difficult Decision #4: Timing Your Expansion
The bigger the firm, the more money-making potential it has. But as any seasoned entrepreneur will tell you, expansion is not without risk. Expansions that occur too early can result in wasted resources, high debt, and a bleak outlook on the balance sheet. Expansions done too late can result in missed opportunities and a loss of market leadership.
Timing when to scale is more an art than a science. It’s up to the individual talent of the entrepreneur to figure out the right time to do so. But, along with the other decisions in this list, it’s a tough one. The risks are high.
Entrepreneurs can do things to mitigate the risks, like using easily scalable resources and not committing to capital expenditure without demand already in place. Understanding what is capital allowances can also help firms navigate their financial obligations and optimize their tax planning. However, not all firms are set up in this way, and sometimes, you just have to bite the bullet.
Difficult Decision #5: Choosing Who Will Fund You
Entrepreneurs need funding to buy the resources they need to make money in the long term. But who they choose to fund them can make a big difference to the overall success of their business.
Every source of funding has advantages and drawbacks. An advantage of VCs, for instance, is that they can offer cash upfront if they like your idea and offer advice on how to make a return. The downside is that they may require control or ownership over your operations – something that you may not want to relinquish.
Banks are a good source of finance, but they often can’t offer help on the ground. What’s more, they can be inflexible when it comes to repayments, which could necessitate the need for expensive bridge loans.
- This post has been written by an outside source – See Disclosure Policy
