Four Questions All Entrepreneurs Ask Themselves (but don't expect to)
Every now and then, you might think back on your life and wonder how you got where you are. Maybe you didn't expect to wind up in the state that you did; maybe you're lost and looking for direction; maybe you've awakened at 5am in a Denny's parking lot and you have to make a change before this happens again.
A group of people that often feel similarly stupid are entrepreneurs, the sorts who go out and start things for themselves. This week, we're recounting four of the favorite questions we've asked ourselves along the way—and questions that, to boot, we didn't expect to ask ourselves.
“How much money is my time worth, really?"
While it’s exciting to go into business for yourself, setting your prices is a surprisingly sticky challenge, whether you're selling products or services. It's especially tricky for people offering creative or professional services; pricing those services means qualifying your work in a numerical way, not just stating an opinion of yourself. It’s easy enough to say you’re a competent, creative book designer, for example, and maybe you are—but does that translate to $30 an hour? How about $50 an hour? Who’s to say?
It could be more than that—or less than both—depending upon who you ask. What’s fun (and terrifying) to realize, especially in the case of service-based businesses, is that the prices, at some level, are completely made up. No one made a formula to decide how much certain specialists should be paid; those people just chose a price and went to market with it. You realize, as a result of this, that your time is worth whatever you claim as long as you can find someone to buy it.
Just remember that, whatever you might nominally earn per hour, you’re going to make considerably less on average once you’ve factored in the hours you spent doing everything else, from developing your website to marketing to networking to developing leads. Those take time that isn’t directly compensated; if you want to earn the big bucks, you need as high an hourly rate as you can justify, as many hours as possible spent doing billable work, and as few hours as possible spent on other matters.
“If I have so much money on paper, why am I so broke?"
Ah, cash flows. They’re the bane of any business’s existence, and most people (who don’t run a business or work with money for a living) don’t even know what cash flows refers to. In short, it’s how much money is going in and out at any given time—which sounds simple enough, but it’s tricky because you receive income and spend money at different times, which sometimes have trouble lining up. For example, if a business can’t raise enough cash for a big equipment purchase, even though plenty of money is guaranteed to them in the future, that’s a cash flow problem.
These kinds of problems are almost inevitable (A) because most people aren’t sitting on tons of cash, and (B) because most people don’t have access to low-interest credit—meaning they can’t easily borrow to cover short periods when they need more money than they have. We may as well add, since we’re talking about going into business for yourself, that (C) you do have to continue to pay yourself, at least enough to keep the lights on. That means that businesses lurch forward, practicing triage with their incoming money, directing it to areas that need attention first and rationing it carefully.
Two things often result, and they’re a rather perverse combination. The first is that business owners, even the successful ones, often pay themselves as little as they can afford; they’re aware that the real potential comes from growing their opportunities, so they invest as much as possible and take as little as they can manage. The second is that businesses are often sitting on certain amounts of cash that they cannot touch—for example, it’s common sense that a business with physical inventory (like Code&Quill) must hold money to replace that inventory, or else they’ll run out of inventory and won’t have the money to order more. There are a dozen reasons a business might hold money despite one or more immediate uses for it, even despite the owner’s need to pay himself. So, sometimes, you’ll be drowning in money and won’t be able to drink a drop of it.
“When will I be able to take a vacation?"
Among readers here, it’s probably common knowledge that entrepreneurs, in terms of their image, are popularly misunderstood. We like to picture entrepreneurs as Justin Timberlake playing Sean Parker in The Social Network: self-confident, sexy, rich, and with a flair for the dramatic. He still parties with college students; he wakes up hours after sunrise; he lives somewhere, though he could do (whatever he does) from anywhere in the world. Life is his vacation, briefly interrupted by meetings and close-quarter conversations in nightclubs and bars.
In reality, most entrepreneurs start out like a five-year-old ballerina: you were brave to get out there, you worked hard on your dance, and apparently you were really proud of what you did, but oh honey does it need some work. Being an entrepreneur is like being in college, except there are no semesters and no grades; your professors don’t know they’re your professors, and not only do you have to find them but you have to schedule class for yourself; you have to learn everything in time for the final exam, except there’s no final exam—there’s just life, and if you run out of money, you fail. Class is in session at the school of hard-knock economics; take vacations at your own peril.
What is patently true about self-employment is that you have the freedom to come and go as you please; you can set your own hours and weekends, and you can take vacations or other leaves of absence whenever you choose. What is (again) perversely ironic is that the people who have the most freedom for vacation often have the least ability, or the least mental freedom, to actually take one. Sure, there is a sense in which entrepreneurs are “never” at work—but there’s also a sense in which they’re always at work, and until they can reach a point of stability, a vacation—in the real sense of the word—is often impossible.
"Could I ever go back?"
Sometimes, when things are most difficult—when deadlines are piling up, when you’ve just paid thousands in taxes, when you’re having a bad day—you feel a bit of Stockholm Syndrome for the old ways, for having a typical job. It’s a grass-is-greener problem; when you’re still working that job and trying to figure out how to make it on your own, you want desperately to escape. Then, once you’ve made it past the walls and you realize the wilderness is waiting for you, sometimes you wish you could go back inside. Maybe there’s no easy way to be happy, except to choose whether to be inside or out and then make yourself comfortable.
What might happen to you—and what happened to us—is something like what happens in a scene of The Matrix. After Neo escapes the Matrix and comes to grips with the real world, he says to Morpheus, I can’t go back, can I? Morpheus’s response is, more or less: “No, but if you could, would you want to?” The answer is an implicit no because Morpheus understands that there’s more to the world he’s shown Neo than how enjoyable or understandable it is; it has value because it is a place where people are free to survive and thrive on their own, where people can construct their own realities.
It can be a hectic, bipolar kind of life, but great rewards often require great risk. It's cliché, but it's true: at the end of all of your traveling, the thing you stand most to find is yourself. That's why we're outside the walls—and while it isn't easy to build our own, we don't mind the exposure.
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