“If you wanna live life on your own terms,
You gotta be willing to crash and burn…”
– “Primal Scream, ” Mötley Crüe, 1991
When most people hear the term, “entrepreneur,” the first names that come to mind are usually Jeff Bezos, Steve Jobs, or Mark Zuckerberg. While it’s understandable why these tech icons are first and foremost on people’s minds, the fact is, of the 30 million small businesses in the country, very few are going to create the next Amazon, Apple, or Facebook. For those entrepreneurs in the RIA space, most of us are not going to create the next Focus Financial, which went public in 2018 and is currently valued at $3.3 billion, or the next Edelman Financial Engines, which was recently valued at $7.3 billion after receiving an investment from Warburg Pincus. Whether we are advisors starting RIAs, or consultants or vendors servicing those advisors, the allure of starting your own company usually isn’t about retiring as a billionaire, it’s simply a desire to run your business and engage with clients in the manner in which you see fit. Maybe your current employer is preventing you from working with a segment of clients that you are drawn to, or you aren’t able to market in the manner you have always dreamed, or perhaps you want to travel more (or less) than is currently available with your current job, etc.
There are many, many reasons people flip the switch from employee to entrepreneur and take the leap of faith to start their own business and become their own boss. The specifics will vary from person to person, but I think all can agree that the desire to “live life on their own terms” is one of the biggest overriding themes driving them. But as Scott MacKillop recently stated in his fantastic article for Wealthmanagement.com, Surviving the First Years of Growth, “Those who start down the entrepreneurial path are simply not mentally prepared for the difficulty of the journey.” The entrepreneurial way of life is far from the lifestyle that Mötley Crüe made famous in the ‘80s – it has very little to do with fancy cars, private jets, and endless bottles of champagne. As Scott detailed in his article, “successfully starting and growing your own firm is mostly not about glamour. It’s about translating your vision into a plan and then executing that plan. It’s hard work.”
Even more troubling than the sheer number of hours, weeks, months, and years needed to turn a budding business idea into a successful enterprise, is the very serious case of the “What if’s” that can be so debilitating to business owners of all sizes and across all industries. “What if the business doesn’t take off quickly enough and my current lifestyle suffers?” “What if we can’t join our friends on the annual ski trip this year and they make fun of us?” “What if my family thinks I’m crazy for leaving the safety of my current job?” Scott’s article does a fantastic job of walking readers through the four stages of the entrepreneur’s emotional roller coaster, but at the end of the day, the business owner simply needs to fight through their insecurities and be willing to “crash and burn,” and learn lessons from those missteps.
A recent Bloomberg Businessweek article pointed out that, “When founding a company, you spend most of your time convincing people to believe in you and give you money. It’s a very weak position, and very humbling.” If business owners can’t get comfortable living in that weak position throughout the early days (and years!) of their venture, they will inevitably fail to achieve their big dreams. The Bloomberg article concludes that grit – “a combination of perseverance and determination” – is the most important trait that will drive entrepreneurs to achieve success. Countless 80’s bands, including Mötley Crüe, tell stories of “the early days” before they reached success, rotating from one friend’s couch to another and subsisting on bologna sandwiches. The entrepreneurial world’s version of that lifestyle is the “ramen diet,” which has been documented in numerous articles and blog posts. It’s not always pretty, but it must be the (hopefully temporary) lifestyle you are willing to endure if you have the audacity to live life on your own terms.
Ever since launching PFI Advisors in 2015 alongside my wife and business partner, Larissa (“Reese”) Sonnen, I’ve kept the above lyrics rolling through my head… especially whenever things got a little rough and we had to overcome one obstacle or another. In addition to “living life on their own terms,” there’s another popular entrepreneurial quote that says, “Entrepreneurs are the only ones who are willing to work 80 hours per week (for themselves) just so they don’t have to work 40 hours per week (for someone else).” But the reason so many small businesses don’t make it (over 50% fail within 5 years) is because most entrepreneurs aren’t willing to put themselves out there and risk a very public failure. It doesn’t happen overnight – as Scott MacKillop stated in his article, “At some point you will realize that what you imagined was a destination is really a continuous journey – an ongoing series of victories and challenges” – but for those willing to “risk it all,” they will wake up one day to discover they have been rewarded with a lifestyle on their own terms.