It was an interesting day: I did not work at all, but I couldn't get work out of my mind. Everything from CurrentCo's sales pipeline (which is not nearly as full as I would like) to NewCo's new product line (that does not’t exist yet) and how everyone else seems to already have a product/web site/service that does something similar. I have these types of days every so often. Days in which my internal critic seems to switch on and tell me that everything is going to hell. I don't know if you have these types of days, but as an entrepreneur I get them and they are tough to shake.
Part of the problem (I guess) is the lack of certainty in an entrepreneur's life. Some days are great and everyone is buying, and other days suck; no one is buying and the competition is not only at the door, but they are at the dining room table having your P&L as a midnight snack.
The internal critic. I'm sure we all have times in which our internal critic won’t shut-up. I tend to get these days when I see other people who are either further in their career than I am, have a more stable business or business plan (i.e. they have venture funding), or are further in a career that I'd like to have (at least the romantic version I have in my head, I'd like to have). And today is no different. I talked with a friend of mine who has a career that is very, very stable (although exceedingly time consuming) and will be making mid-six figures in 5-7 years ... almost absolutely. It is times like these that I think to myself I made the wrong choice being an entrepreneur. So the question is ... how do you get the internal critic to quiet down and when should you listen to him?
Solution: Uncertainty & Variability: I have found there are a couple of things that help me, although they didn't do much today, so I can't say they work all the time.
1.) Figure out how to become comfortable being uncomfortable. That is something I have told my father, but it is more difficult to execute than as it initially seems (isn't everything worthwhile that way). I've read and listened to all the self-help experts (and I would definitely recommend listening to Anthony Robbins and Wayne Dyer since they do have nuggets of gold in their teaching that help at these times).
The biggest thing I've learned is to embrace uncertainty and that internal critic when it comes my way. Basically I typically let my internal critic run wild for a couple of hours. This tends to be a very depressing couple of hours and by the end I am usually thinking I should quit what I'm doing, go get a job and climb the corporate ladder. Even then my internal voice tends to say that I couldn't get a job if I tried and that no one would hire me since I don't have ... or ... or ... (fill in the blanks with anything).
Basically I let myself get into a very negative space and then I write out what my internal critic says. This way I can go through the writings later on and either come up with good solutions, or throw away what I thought as pure negative ramblings.
So now that I've got the negativity out of my system (and sometimes it takes a couple of days, not a couple of hours, but I've got to get it out), I start thinking about the uncertainty of it all: Both from a negative and a positive side. This helps me focus on how to create more direction in my outcomes by coming up with actions that help close off the negatives (i.e. doing the "if this client left" exercise and basically doing what Benjamin Franklin used to do: plan for the worst and when the best happens be pleasantly surprised). This helps me get control of the uncertainty and let’s me anticipate and pre-plan for problems. And this takes some of the nervousness out of being uncertain.
From what I’ve seen there are many entrepreneurs out there that can only see the positive side of the business (i.e. every company is going to become the next Google). I find that the negative internal critic exercise and putting in place measures to prevent failure, counters the unbridled enthusiasm that cam accompany entrepreneurship. I’m sure investors (from angels to VC and beyond), employees, and partners want someone who can drive the enterprise through rough waters. The internal critic and becoming comfortable with being uncomfortable help drive this point home (as my sales coach says, “the veteran sales pro thinks he’s lost until he’s won, while the amateur thinks he won until he’s lost” – more on sales in a future post).
2.) Reduce variability (personally and professionally). This is not something I learned until much later in life. Being an entrepreneur is about taking risk, and risk is about the possibility of failure, and failure is about the amount of time and/or resources it takes to recover to the condition prior to failure. I didn’t used to think about risk in this way. I used to think that risk was basically external actions that would sink my new found idea (i.e. not getting the right funding, not landing the right clients, etc). But thinking about risk in terms of the time it takes to recover means that you must have enough resources in place to recover.
There are plenty of good books on risk (I’ll come up with a personal reading list later), but most of these books have either an academic bent to them or don’t give practical tools to help manage risk. So the following is what I’ve learned:
* Personal Risk Reduction: An entrepreneur can be more level headed and think clearly when less of his personal lifestyle is at stake in the daily decision making of the organization. When everything you have is tied up in the business you start thinking from a scarcity point of view (I’m an Econ guy so many of my mental models come from the world of Economics). The scarcity model is about hording as much as possible as quickly as possible. This is a real problem because it creates short sighted thinking and either makes the entrepreneur take cowboy style risks (i.e. let’s spend all our marketing money on the SuperBowl ad, then if we don’t get the response we projected we are sunk, but at least we tried). Or the entrepreneur becomes scared to take any risks and becomes paralyzed.
To counteract this problem, I recommend (at least it has worked for me) that every entrepreneur start immediately crafting income streams that are not dependent upon the business. Real Estate is great (yes it may sound like a cliché, but the Rich Dad Poor Dad model really works and I would recommend his book). The problem is that real estate takes precious time to manage. Basically what I have found that works for me is managed real estate (investment trusts, individually managed properties, such as
But you need to get income coming into your personal pocket that does not change with the fortunes of your business. This lets you take a more balanced view of your business decisions.
This was never clearer in CurrentCo than when I had to fire a client. When it became apparent that keeping the client would harm our reputation, I had to make the tough decision to fire a $500K/year revenue stream. Very, very tough to do, and I would not have been able to do it if I didn’t have the security of at least some other personal revenue coming into my pocket (in the end it was the right decision, scary, but right).
* Professional Risk Reduction: This basically follows along the same lines as above, except that it is difficult for a start-up business to have multiple uncorrelated revenue streams. What I did to manage professional risk was to keep the company as flexible as possible. This means not investing in large facilities (either manufacturing or office space), maxing out the productivity of current employees rather than add new employees (i.e. basically keeping fixed costs as low as possible).
This “only buy what you absolutely need” / “stay as flexible as you can” / “make it easy to expand and contract” mentality has allowed CurrentCo (and hopefully NewCo) the ability to make mistakes, miss our mark and still recover (remember that is what this whole discussion is about … risk and recovery time).
I know this is a long post, and I probably need to break this up into several separate topics, but once I get going it’s hard to stop.
Hope some of the ideas are beneficial.
See you on the wire.