“Am I Ready to Become an Entrepreneur?”
I’ve been on a podcast tour over the past few weeks in support of my forthcoming book, Employee to Entrepreneur: How to Earn Your Freedom and Do Work That Matters.
One question that frequently comes up is “how does somebody know if they’re ready for entrepreneurship?”.
Having reflected on this question in the time since, I’ve landed on the following six Ms (for ease of remembering, I conveniently found letters that all start with M to reflect each signal).
How much is enough?
How much do you need to satisfy financial commitments, the needs of any dependents you have and any other necessities? If you’ve got a side hustle already and your side hustle is already making more than enough to satisfy your basic needs, then perhaps it’s time to jump ship.
When it comes to entrepreneurship, particularly during your first year or two, you will more likely than not need to sacrifice. I left a six-figure gig at an investment bank, only to pay myself $26,000 a year during my first startup, before paying myself nothing during the first six months of my curren’t business’ life. It’s the grit that makes the pearl.
As Roman philosopher Seneca the Younger said, “what does it matter how much a man has laid up in his safe, or in his warehouse, how large are his flocks and how fat his dividends, if he covets his neighbour’s property, and reckons, not his past gains, but his hopes of gains to come? Do you ask what is the proper limit to wealth? It is, first, to have what is necessary, and, second, to have what is enough”.
Ideally, you should use work to bankroll your product, and savings (and heaven forbid, credit cards) should only be used as a last resort.
Reverse Side Hustle
I’m a fan of the ‘reverse side hustle’. I used this when I secured a 2-day a week contractor gig at KPMG, after resigning from a permanent post at Macquarie Bank. Contractor gigs pay very comfortable daily rates, and in my case, it was more than enough to keep me going and ensured I had the rest of the week to focus on nothing but my new venture. The problem with ‘side hustles’ generally is that you end up spending an hour or two in the evenings, after a massive day in the office, on them, with what little cognitive capacity you have left.
As Ben Horowitz, of pre-eminent VC firm Andreesen Horowitz, says, “the number one skill a CEO needs to master is managing one’s psychology”. You might have a great idea and capabilities, but no matter how good your idea, it will still be a long road ahead, fraught with all sorts of pitfalls and way more ‘what could go wrongs’ than ‘what could go rights’ .
In order to play the long game, you need to channel Rocky Balboa and keep moving forward with every hit.
If you’re the type of person who baulks at their ego being challenged or shies away from adversity, then entrepreneurship might not be for you. If you’ve actively developed resilience, through a number of means — whether that be martial arts, climbing mountains, having difficult conversations, or overcoming socioeconomic hardship, amongst innumerable other things you can do — voluntary or otherwise — to develop resilience, then maybe you’re ready.
Building on the mindset piece, it’s easier to play the long game when you have a worthwhile mission. It’s much easier to get up in the morning and get after it when things aren’t going your way when you truly believe in the why underpinning your what.
As Roman emperor and philosopher king, Marcus Aurelius, put it in his journals, “nothing should be done without purpose”.
Have you developed the requisite skills required of an entrepreneur? Whether that be ideation, experimentation, project management, people management, leadership, sales, marketing, product management and so on? Determine what your strengths are and play to them, correct any weaknesses you absolutely need to correct, and cut, automate or delegate everything else to people with complementary skill-sets.
Now there will be heaps that you will learn once you make the leap, perhaps a lot more than you can ever learn before you do, but why risk falling into common pitfalls, and not leveraging tools and techniques that can 10X your chances of success?
“If I have seen further, it’s by standing on the shoulders of giants”. Do your bit to upskill yourself by reading the classics on the aforementioned topics so that you give yourself the best chance of success and avoid making the same mistakes that most first-time entrepreneurs make.
5 Market Validation
If you’re working on a side hustle, do you have any market validation? This need not be revenue. It could extend to leading indicators stemming from, say, problem and solution interviews or early low-fidelity prototypes you’ve developed and subsequent sign-ups from target customer segments.
You want to look for signals and evidence that there is legitimate market appetite for your idea, and that people are willing to pay more for your product than it costs you to make it and deliver it to them. There’s no sense in jumping out without a parachute without a product that anybody wants.
A big part of entrepreneurship is problem solving, and that goes far beyond the initial idea, but it extends to marketing problems, sales problems, scale problems, hiring problems and so on. You’re constantly solving problems.
To that end, what have you done to develop memories — eg. learnings across disparate areas so that your associational thinking, or ‘dot connecting’ is at a high level? Do you read widely? Speak or associate with people from all disciplines? Travel and engage in all sorts of activities? Listen to a wide variety of podcasts, audiobooks or read lots of eclectic blogs?
As Steve Jobs said, “you can’t connect the dots looking forwards, you can only connect them looking backwards”. One must collect many dots from myriad disciplines and areas in order to see opportunities most people don’t.
Genius, after all, is the ability to see.
If you’re thinking about making the jump, reflect on these six Ms, use data, speak to meritable people and make a call.
You can learn more about my forthcoming book at www.employeetoentrepreneur.io