If you are thinking about starting a business now, here are 10 reasons why you should reconsider.
1. The economy sucks right now and it is going to get worse before it gets better.
2. If you have a job now, it’s best to keep it as long as you can. Getting a regular paycheck rocks.
3. Frankly, running a business is a 24×7 endeavor, it’s just plain hard there is no way around it. Expect stress, less hair, and exhaustion.
4. Accountability is tough, the buck stops with you, no more passing the blame to anyone for poor performance.
5. People are fickle, they love you and they hate you. Expect to deal with difficult people, horrible customers, threatened and real lawsuits, tough employees, and ultimately brutal people problems.
6. It takes at least 1 year of executing the business to figure out how to win and another to actually build it.
7. What financing? Better get used to none.
8. It’s more fun to just sit on a beach and wait until the economy turns around. You can’t afford failure anyway as most businesses fail.
9. It’s lonely and no one else is starting businesses right now.
10. The government keeps spending cash and the tax man will need to take his fair share. By the time you sell the company, most of the proceeds will not be going to you.
My take is if you start a company now, you’re either a crazy fool or you’re an entrepreneur. Maybe a little bit of both! The best entrepreneurs are aware of the odds against them, yet they still dream, build a vision and actually start. No matter who you are, I respect those of you who risk it all and jump in with both feet. It’s never easy, but the journey is worth it. Share below why you are thinking about taking the plunge despite the challenges. Or, if you are not starting now, why not?
Hey Andy,
Valid points, but let me play devils advocate here for a second. While the above points can be true, the exact opposite can be said as well. With the economy currently in the gutter, big businesses closing doors and smaller business unable to afford the “big” guys I, personally, have found more work in my freelance design business. More people are looking to the small entrepreneur since they can get the same, if not better, level of work and customer relationships.
Sure you should definitely make sure you are ready before you make the jump into a new company, but much like NOW is the wrong time it can also be the right time, depending on what you do and how you go about it.
Good read and thanks for this article. I’m interested to read other’s feedback on this discussion.
I am not thinking in start a big business, doing big deals for a lot of money. My expectations are to have a business to have a good standart of life right now, because I am 47 years old and after working in different companies, nobody wants to give me a new job, so I decided to become a businessman by myself. If you learn from your own experience and from the experience of other smarter than you you can overcome difficulties.
Andy, I must agree with Brian on this one. Personally, I just entered a stage in my life where I have no choice but to go into self employment. My thoughts are: without those of us who try to start something up or invent the new wheel so to speak, it will be that much harder and time consuming to re-start the economy into a progressive path again.
Only with risk takers and innovators can we really advance. Look at the internet bubble for instance. Without the innovations and new ideas that were brought forward (and most of which failed) there is little to no advancement for everybody else.
If this is a second wave of the tech bubble, I for one would like to be a part of it even if I am one of those to fail. At lease I can go down knowing that I helped in at lease the most minimal way I can.
Just some counterpoints:
What’s the point of waking up in the morning then?
1) There are businesses that thrive in down economies.
2) This is valid regardless of the nature of the economy. I view it more of a challenge than a reason not to start a business. With proper saving and life rearrangements, you can at least test your own waters for a little bit.
3) At first maybe..but building a business is all about scaling.
4) Accountability makes me feel responsible and good. This is a reason TO start a business
5) This is true of all things in life..job..business..family..everywhere.
6) This is the real challenge.
7) You shouldn’t expect financing when starting a business but there are potential sources. SBA, local bank, friends, family, angel investors, etc (no VC, though). You can do a loan, investment, combo, etc.
9) I’m not sure about this. With massive layoffs, what are those people doing?
10) Politics aside..it depends on who gets in office. Know who to vote for based on these policies. I doubt corporate tax will go up. Even if it does..just setup an S Corp or some other organization so you avoid the dreaded double-taxation.
Great post. I like reading lists like this. People DO need to be aware of the obstacles when starting a business and decide whether or not they can really cut it. A good chunk of people can’t.
As a man wiser than me likes to say: “That’s right!”
Andy,
I love the fact that you are throwing the hardships of starting a business into people’s faces… I especially like the point of, “1 year to execute and another to build.”
I must say however, that I think it was you who told me that the businesses that not only survive, but can thrive in this sort of economy, will be the ones that take off as soon as it recovers!
All are valid points Andy for not starting a business.
Except, i start a business today because i can’t bear the idea of losing another day of my life not doing what i am supposed to be doing. Another day dreaming instead of doing.
As for fool and entrepreneur, i think my company name reflects both elements. “Blindoptimists”. =)
I’ll have to agree with Andy on this one. The margin for error in creating a successful startup right now is far tinier than it has been in a long time. You need to be a great executor, and your idea better be good — damn good.
So, telling people not to start a business right now is great advice. At a minimum, it will make them think twice. If people have their doubts, this is a good time to listen to them. If your idea and abilities are too strong to back down, and you go for it anyway, call me. I might want to invest.
In the current economy, that salaried job is no more secure than your own business. Possibly less so — you can always get new customers, but it’s rough to get another salaried job.
Great post. Very practical and insightful. In particular, I completely agree that “It takes at least 1 year of executing the business to figure out how to win and another to actually build it”.
I think a lot of entrepreneurs underestimate the time it takes to figure out their business model — “business model” in the heads is different from the business model that works in real world.
I’d also like to offer a “hybrid approach” — holding onto your job while work on a working prototype for your start-up idea to validate your business model. Instead of getting VC funding, think your employers as your “angel investor”. The challenge is to maintain satisfactory performance at work while make progress on the start-up idea. But, I believe it’s doable, given the virtual infrastructure available today.
GeekMBA360
Career Insight at The Intersection of Business and Technology
I’m all in because I know the following to be true:
“I have learned, that if one advances confidently in the direction of his dreams, and endeavors to live the life he has imagined, he will meet with a success unexpected in common hours.” - HENRY DAVID THOREAU
Andy, you forgot to mention:
* you’ll get paid a lot less than at that safe job, and possibly have to invest your own money, or borrow (good luck!)
* you’ll likely gain weight, eat poorly and exercise less than usual — that can’t be healthy
* and, even if you succeed, it’ll probably just be because you got lucky
Did you get lucky, Dave? How’s Teachstreet going?
Ha! No, not lucky yet… just enjoying the non-stop passion-filled days and gradual weight gain
Because they are everywhere and want to slay us. We need to destroy their nest before it’s too late. Help me Andy!
Your words are speaking to my reality but i have to admit that after leaving my comfy corporate career only 6 months, i am the happiest i have been in a long while. Yes, its hard to go months without a paycheck and yes its hard to be a one woman show but the inner peace i feel and the motivation which has infested my life and everyone around me is worth every second of this temporary struggle. The sea of opportunity awaits those that dive in and its an amazing swim. This is a huge hug to all the other mermaids out there swimming in uncertainty - beautifully riding on their hopes, strengths, talents and dreams.
There are many companies which are still profitable in this economy. It does not make sense to start a company when everyone is starting. You would have tremendous compitition. I agree with you that it’s good to have a regular paycheck, but you can start a company in part time. Most of the today’s biggest companies have started in part time and in owner’s garage, like, HP and APPLE. Many great companies were born during an economic slump, like, Burger King, IHOP, Hyatt, FedEx, Microsoft, GE, HP etc. So I don’t think there’s a good or bad time to start any business.
The main problem in many failed startups is they focus more on a product or service which is not useful or required by the market instead of recognized a market need and filled it. If you find out what users want and form a company based on market demands, any season is good to start a company.
Cheers,
Pritesh
http://twitter.com/mehta1p
Absolutely Totally Agree with you. When you know the need of the hour why to delay it up.
Valid points but why the negativity? Tough economic times or not, starting and running a company is always difficult. We need to perpetuate the wheel of good karma and inspire more crazy people to give something like this a shot.
Entrepreneurs are going to be a major driving force in turning the nation around and getting out of the red. It’s important to know the difficulties and risks, but it’s more important to encourage those individuals that are crazy enough to do something.
I would be interested to figure out what percentage of new businesses failed during …
- July 1981–Nov 1982
- Nov. 1973– March 1975
- 1929–1933
Also, it would be interesting to see what NEW businesses (IE Businesses that were started admist a recession/depression) have succeeded in Japan over the course of the last 15-20 years.
- - -
Something to think about. Say two people were each brought a list of 10 identical NEW businesses across all industries. For the next 3 years, 1 person was allowed to INVEST, the other was allowed to SHORT. The question becomes, “In this market, which investor would you rather be?”.
The interesting thing about this analogy is that when most people start their own business, they are only aware of themselves. In essence they are only aware of their 1 data point. And when looking at yourself, you only want to see success so therefore you think your business will always succeed.
But an illuminating question to ask when interviewing an entrepreneur is tell them the story above then ask the coinciding question.
“In this market, which investor would you rather be?”.
If the entrepreneur answers that he would like to INVEST, then keep the crazy person away from your capital. If the dude tells you he would SHORT the businesses, then comes the real question.
“Why should I invest in you?” and at this point, in this economy, the guy/gal better wow your pants off with their guts, facts, and solid numbers. Not to mention a hell of a product.
-later
I think a few folks may have missed Andy’s point. The point is it’s tough out there and there are lots of good excuses you can come up with not to start a business - but if you are a real entrepreneur then you won’t let those get in your way. In a good economy you can come up with just as many excuses not to start, “I’m getting promoted, commissions are rolling in, too much competition right now, etc.”
I have a bunch of friends who have a “great business idea” that they’ve been talking about for years. Then I have other friends who do more than talk and actually start a business around their idea. I can assure you that the folks who actually start stand a better chance of succeeding than those who simply talk about it.
I’m guessing this is Andy’s point, and it is a good one.
Hope and Change inspired this gal to pull up stakes from a comfy global consulting company and make a leap into a new life with no safety net. Like the generation before us that was inspired by JFK, I have been inspired by our current President and all of those who see beyond the obvious hurdles. American’s are entrepreneurs at heart and it’s what we really do best. We owe it to the generations that have come before us and those to follow. If we fail, then at least we tried. I can’t say that is the case for the majority of the working public. Carpe Diem!
I disagree. I think NOW is the time to start off on your own as the old business structures are crumbling. It’s up to all the unemployed but well educated and seasoned workers to take advantage of the situation.
Of course it’s hard to open your own business now but was it ever easy?? Weren’t all of thouse points always true? Things have defenetly got harder and seeing oportunities in this down economy is hard as we’re not used to see the kind of opportunities that are comming up. And let me say something, they are everywhere! Once I read something that expresses exatcly what I mean… “If everybody is crying, sell tissues”. Love that sentence and it’s sooo true.
I like how Jim Collins put it: Do you want all of your career eggs in one basket that someone else like your boss controls? Someone who can lay you off with no notice? Or do you want your eggs in a basket that you control? I’ll take my chances with me!
During recession new ideas new thoughts emerge. Frankly speaking i am having lot of free time in this recession and i am utilizing it for new startups.
Just when you think it has gotten as bad as it can, it gets worse.
Keep your job as long as you can.
Dear Andy,
Do you know the difference between security and freedom?I’m sure you don’t.
Think about this two meanings.If you want security you can work for somebody who is going to be your boss.If you want a freedom then create it yourself by running your own business not matter what!
Kind regards,
I am at the point in my life where I am just burned out with the 9-5. This down economy is perfect for starting my business as all the other potential competiton is just sitting around and waiting. I personally cannot wait and having my own company is all I can think about right now.
Wish me luck!
I started in June! There will always be bad times to start a business… but when is there a good time? This helps me in the aspect that I should pay attention to the harsh elements of owning a business right now, so I can work around them. It is good to be aware. Thank you.
Thank god I read the entire post. I almost spit out my peanut butter sandwhich reading all of those poor excuses to not start a business! LOL!!!
Freedom and the challenge is why I am an entrepreneur. I just can’t stand the thought of going back to work for a company doing the “9-5″ thing. I’d rather work 100 hours a week for myself than 40 hours a week for someone else.
I arrived here from Neil Patel’s blog. Your blog looks great so far. I think I’ll stick around for awhile
Thank you.
The truth is that we can identify hundreds of reasons not to start a business. The more people don’t go into business, I think the better it is for me as an entrepreneur.
We can also name a few reasons that makes it all worth it.