It is a popular opinion that entrepreneurship is the best way to accumulate wealth. I’m a subscriber to this school of thought. Running a business puts you on the wheel. You decide what you’ll do, when you’ll do it and most importantly, how much you’ll earn. No fuss about glass ceilings or whatever other bottlenecks you get in a structured career path.
With this knowledge, most of us will rush to brand ourselves entrepreneurs because of the monetary promise it holds. Yes, the end result is financial freedom, but going into entrepreneurship for the money alone almost always turns out to be a very expensive experience.
Why you’ll lose more by chasing after money
As a novice businessperson, I’ve often lost money because I was too excited about the potential return of an investment opportunity. Running simulations in your head about how much you could make, months or years after launch is very satisfying, it arouses a certain excitement that keeps you awake. When you focus on this thought, everything checks out! The blueprint is set and ready for launch… or is it?
Focusing on potential profit alone takes your mind away from what you are actually supposed to do. Most successful entrepreneurs have repeatedly said that throughout their journey, they remained focused on solving a problem. Therefore, entrepreneurship is about solving problems, and making society a little better. Yes, this is a simplistic way to look at it, but it is the bedrock upon which every other aspect is built on. Money is a byproduct of your solutions.
A bit of my experience losing money
About 1 year ago when I started investing in agribusiness, I was sure I had everything figured out. From my research, the production cycle was clear, I had found the market for my product (or so I thought) and the budget for the project was in place (again, not what I thought). I did a cash flow analysis, determined when the business would break even. Everything was set! All that was left was finding land to lease and kick start the project, and yes, I even had expansion plans in place!
Here’s a confession, the deal was very good, and I did not think twice! The math made sense and I was sure it would not fail. My justification for decisions I made was that it was worth the risk (and what kind of entrepreneur are you if you are afraid of risk, huh?). Looking back, I see that I made reckless decisions in the name of taking risks. I did not stop to think everything through, and it costed a fortune!
First, I made rush decisions when paying for land lease. After a long unsuccessful l search, I finally found a great location at very fair pricing and I did not hesitate. No thorough background checks were done and as a result, I lost money to a con land broker. Weeks later, I paid more in land lease fees after meeting the real owner. A lot of time was already wasted, and money lost.
In a bid to save money, I decided to proceed to planting without complete irrigation system setup. The focus was to kick off as soon as possible to get returns sooner. A few months later, so much money was spent on labor as a result of an inefficient system, plant success rates after transplanting were below 50%, and growth rate was poor. The numbers no longer made sense.
In the long run, I lost more than I was trying to save. The allure of getting money as soon as possible with minimal costs was my downfall with that project.
At this point, the only way to stop the bleeding was to cut the arm off. So, we closed that project and went back to the drawing board. After several months, expenditure was close over 80% above budget and there was nothing to show for it.
What I learnt losing money
Entrepreneurship requires patience. Even with a solid business plan, you must pay attention to the small details. It is very easy to cave into the pressure of limited resources that have to be utilized within a limited time frame. Spending an extra month doing it right is worth more than saving a week doing incomplete work. The foundation of a house must be well built from the beginning or it may bring the entire building down in the future.
It is never about the money. Going into entrepreneurship to get rich is a short and shallow goal. There is no end to how much more money you can possibly earn. Finding a reason that solves a real-world problem and that speaks to your heart will keep you going when times get hard. Doing it for something you believe in makes it bigger than yourself. When you do it selflessly, you find meaning and start doing the right things.
Your startup is not your source of bread and butter. Truth is, a startup is more likely to fail than succeed. To keep your head clear, do not expect to cater for your daily personal expenses with proceeds from your new business. Plan before hand how you are going to take care of your bills to avoid getting desperate and spending capital for your business. You will also remain focused on growing your business when you don’t have to worry about what you will eat tomorrow.
Give yourself time to grow. When starting up, you have to embrace failure. Do not focus on ‘not losing money’. Instead, get ready to get new experiences every day. The cliché ‘Experience is the best teacher’ is true. It is also expensive. Without realizing it, you are in the School of Life, and you are paying a premium in school fees.
Get a mentor. A mentor will help you avoid some pitfalls. There is so much you don’t know, and even more that you haven’t realized you need to know. Getting guidance from someone who has walked a similar journey will allow you to learn from their experiences and yours as well. You may grow faster than when you are trying to figure out everything on your own.
Entrepreneurship is not a destination. It is an endless journey. I’m yet to learn so much. Looking back at my failures, I take my lessons with pride. I’m a better person because of those bad decisions, however expensive. I’m still very new to this and cannot wait to see what the future holds.
I would like to make a special shout out to every young person trying to better themselves through entrepreneurship. There are many success stories, but little is known about the daily struggles of the entrepreneurship journey. There are so much more stories of struggle and sleepless nights that no one tells. I hope my stories give hope to those starting out, like me.