It's All in Your Head

Some entrepreneurs are glad the overheated dotcom era is a distant memory. "A lot of people who didn't know what they were doing jumped in because they [thought they] could wing it, and [they] ticked off a lot of consumers," says Scott Siegel, co-founder and CEO of 6-year-old Sunrise Financial Inc., a mortgage broker in Chicago with 29 employees.

Sunrise's sales doubled every year during the first four years as the company rode the refinancing boom. Now the re-fi era has ended, and interest rates are rising; but Siegel, 38, remains optimistic. An industry shakeout is underway, leaving the company with fewer competitors. While housing prices could fall, Siegel believes the housing market will stay fundamentally strong this year. He stays focused on the day-to-day business instead of small movements in interest rates or political infighting in Washington. "I don't think it matters politically what's going on," Siegel says. "With their homes, people are functioning at more of a local level. It's very myopic." The company plans to double in size over the next few years through strategic alliances with other lenders. Sales hit $1.8 million in 2004, and Siegel hopes to hire at least five new employees in 2005.

Entrepreneurs don't care as much about the big picture as they care about their particular sector, says Donald Mazzella, editor of Small Business Digest, an online publication based in Palisades Park, New Jersey. It polled more than 5,000 small-business owners last year and found 62 percent expected to exceed goals. When it comes to their own businesses, entrepreneurs "are pretty positive about things," Mazzella says. "Certainly in those areas they can control, they're very positive."

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Kimberly Gyuran is president of The Payroll Company, an 11-employee payroll firm based in Las Vegas. Friends and family advised her it wasn't the right time to start a business, but Gyuran took out a loan against her 401(k) and put up her house for collateral for an SBA loan to start the company in November 2000.

Less than a year later, 9/11 happened. The company stayed afloat by offering free payroll services, such as cutting checks and setting up direct deposit accounts for customers, who in turn referred new clients. "It just snowballed," says Gyuran, 39. Helping clients navigate changes in federal employment laws has spurred business in recent months: Today, the company has more than 600 clients and sales approaching $1 million. In December, the company upgraded to a new 2,600-square-foot space.

Gyuran feels reality has met her expectations, but she tends to avoid "energy stealers" like TV news and newspapers. When she feels down, she meditates. "I can't live in fear," she says. "If I spent all my time worrying, I wouldn't have time to grow the business."

For entrepreneurs, staying optimistic means maintaining confidence in their products or services. The state of the economy always plays second fiddle to a really good idea, says Doug Brenhouse, co-founder of MetaCarta Inc., a 4-year-old Cambridge, Massachusetts, software firm whose search engine software is used by clients including the Air Force, Chevron and the Department of Defense.

Brenhouse, 31, spent the first half of 2001 looking for funding and received a grant through the Department of Defense in mid-2001. The war in Iraq has increased demand for software tools that make it easier to access specific information; MetaCarta's staff doubled in 2003 and 2004. "Customers are buying more," says Brenhouse, whose company's sales are less than $10 million a year.

Brenhouse believes the dotcom era taught everyone a good business lesson. He sees the software industry coming back as more companies with good value propositions get funded. But established companies are still shedding overcapacity, and he knows entrepreneurs who have serious doubts about the economy. "Some are really excited about what they're doing and how things are working out for their companies," Brenhouse says. "Some are saying, 'Wow. This is terrible. I can't wait for something else to happen.'"

He'd like to think the hardest times are behind us, but being an entrepreneur requires making hard decisions and taking calculated risks every day, no matter what's going on "out there." His motto? Whether you think you can or you think you can't, it's true. "If I really were pessimistic about the state of the world, our business probably wouldn't be doing as well," he says. "[The economy] can only get better this time around." If 2005 is as volatile as the past four years, entrepreneurs will need all the confidence they can get.

Chris Penttila is Entrepreneur's "Staff Smarts" columnist.

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