Is Entrepreneurship Really "Making Money while You Sleep"?
Posted on 29 January 2017
Two years ago, when I started planning Clarison Enterprises, I subscribed to various entrepreneur forums.
I knew exactly the products that I wanted to design and sell, namely matching high-end leather accessories for women professionals. The majority of the other participants was in the phase of figuring out their niche.
What surprised me most was the motivation of many of these people for wanting to leave a (presumably secure) job and strike out on their own. It commonly went like this: "I am tired of working 9 to 5 and want to be able to vacation with my family while my business generates income on autopilot."
I hope many of you see the foolishness of this fantasy. Starting your own business means that you will be working from 7 a.m. to 11 p.m. seven days a week and will not take a vacation in the first five years (well, I visit manufacturers in Italy twice a year, which I guess may resemble a vacation). During those years nothing will happen in your business without you, unless you have invested millions to build out a solid personnel.
There is always something more to do in a business enterprise: marketing your products, build relationships with the press, work on the next collection. If you don't move quickly, the business will not grow, and it will eventually fail.
If you are not committed to put in the time, then the "business" is just a hobby. In best case it will pay you like a hobby, in the worst case you will lose your investment. Then the most you can hope for is to have had a good time while indulging in fantasies of wealth.
If you want to "make money while you sleep", well, then invest in the stock market as long as it is on the upswing.
Add to this the risk of losing all your investment and the opportunity cost, and I am confident that most of these forum participants would be better off in an employed position.
People interested in entrepreneurship should at least read realistic stories about how successful entrepreneurs have started out. Then they can see how much determination and sheer work it takes to succeed in business and replace the previous income.
Determination and sheer work is not enough, however. We Americans pride ourselves in working hard. You also have to work smart. You have to be realistic about the product. Since the entrepreneur is rarely objective, it is important to talk to potential clients (not to your supportive friends and family) about the product. Listening to objections and concerns is crucial. It would be silly to say "I will carry on no matter what, I won't take no for an answer."
Occasionally I tune in to watch a "Shark Tank" episode. The saddest moments are when an entrepreneur reveals that he (almost always he) has liquidated his retirement savings and mortgaged the family home for a silly business idea. As the mother of a five-year old, my heart goes out to those children seen in the accompanying footage, whose father foolishly diminished their chances in life.
What do you think? Feel free to comment below.