2 Things Entrepreneurs Should Not Worry About
If you’re like most entrepreneurs, odds are your friends ask you a lot more questions about your job than your buddy Bob who works in accounting at an insurance company. Through my zero years of experience as a licensed psychologist, I believe there are two reasons for this.
First, unlike a regular job, there’s no way your friends can figure out how much money you earn. And, yes, they want to know. People are curious and gossipy creatures. Unlike most professions, entrepreneurs have no real salary range. Or, if they do, that range is somewhere between $0 and $10 trillion per year. So your nosey friend is going to keep asking you questions until he gets his answer.
Second, and probably more nobly, your friends are asking you a lot of questions likely because they often fantasize about starting their own company but were never brave enough to do it. So they want to live vicariously through you. I’m more OK with this reason.
When I ran The Tie Bar, my friends would drill me with questions under Reason #1 in an attempt to not-so-subtly find out how much I was earning. “How many ties do you sell a year?” would often be followed with, “And how much money do you profit per tie?” I could often see their minds churning trying to do the math in their heads. I was often tempted to just hand them a calculator.
But there were two other questions I’d also often get that fell under Reason #2. My answer to each of those two questions was the same: “I don’t know.” I was asked these two questions so frequently, I started to believe that I needed a better response. It turns out I was wrong.
After The Tie Bar was acquired, I became an angel investor and mentor to other startups. Only then did I realize that “I don’t know” was the proper answer to those two questions. So it’s time I let you guys respond with “I don’t know” to these same two questions and feel good about it.
Question 1: How much revenue do you expect to do next year?
Answer: I don’t know.
Setting revenue projections. Setting goals. Sounds responsible. Sounds sophisticated. But when you’re an entrepreneur (and not answering to outside investors), I say it’s all bullsh*t. (I’d even include the ‘i’ if Entrepreneur Magazine would let me.)
So let’s start with revenue projections.
Assume you set them for 2015. “In 2015, I expect Awesome Company LLC to earn $1 million in revenue,” you announce to your dog. Now let’s play out the year in two different scenarios.
Scenario #1: You meet your $1 million projection by October, which means you’ll far exceed it by the end of 2015.
So will you take off November and December since you met your projections? Of course not. Will you work less hard because you met your goals? No way. It is your business. Your baby. Your growing venture. We know you’ll still work your ass off. So other than your dog, who really cares that you met your projections?
Scenario #2: It’s December 31 and you just realized you only earned $800,000 in revenue.
So is it because you didn’t work hard enough? Was it because you didn’t pay enough attention to your business? Of course not. So why get mad at yourself for not meeting some arbitrary number you set upon yourself? Did you learn anything by not meeting this $1 million projection? Nope. Not a thing. Your lessons were learned regardless of whether you met the projection.
Entrepreneurs are entrepreneurs because they are decisive, willing to try anything and know when something succeeds or fails. They don’t need numbers to confirm their gut and their instincts. So if you had an underperforming year, you’ll know it. You’ll see growth slowing or numbers dipping. As a result, you’ll try new things or do things differently for next year.
And that’s probably true whether or not you met your projections.
Question 2: What’s your exit strategy?
Answer: I don’t know.
I recently met with a startup app that hadn’t launched yet. Their primary reason for not launching? They wanted to figure out whether they should focus more on getting users or revenue.
Look, I get it. There’s this whole wave of apps and data companies who are anxious to get a $96 billion valuation because they have ‘users.’ But guess what? That’s the exception and not the rule. And more importantly, those anomalous user-based valuations are often made on mature companies, not brand-new pre-revenue startups.
So stop thinking about users. You’re an entrepreneur. You’re a new business. You need to pay your bills. You need to have some operating capital to expand. You need to experience the joy of being your own boss. So how do you accomplish this?
Money. Revenue. Paying customers.
In fact, I am going on record and saying that companies that focus only on users do so because they have no idea how to monetize their business idea. And there’s no way you’ll ever have a successful exit without the ability to earn revenue.
But I digress.
The point is – stop worrying about your exit, which you have limited control over anyway. Stop worrying about an event that, at best, is three years away and more likely 7-800 years away. Stop thinking that your investors, if you have any, need to know your exit strategy today. They know you have no clue. And that’s OK.
Learn to walk before you can run. Learn how to run a company. Learn how to source, market, manage, lead, operate, advertise and sell. And most importantly, enjoy the ride. Learn from your mistakes. Try again. Succeed. And relish in the success.
Because in the end, the only question that really matters is “Are you happy?” And “I don’t know” is the wrong answer for that.