The golden handcuffs of high-profit entrepreneurial ventures can keep founders frozen in place, limiting their pursuits and success.
Most entrepreneurs will go through something I like to call the “Desperation Phase”. This may come after a substantial failure, once your savings and runway begin to dwindle dangerously close to zero, or even at the very beginning of the entrepreneurial grind. This is the point at which you’d do or give anything (at least that’s what you tell yourself) to make your venture minimally successful and avoid returning to a soul-sucking job or tyrannical boss.
I’ve been there — multiple times in fact. These were the times when I told my now fiancé “If I could just make $40k a year — or just enough to cover subsistence living while avoiding a 9 to 5 — I’d be happy.” I truly believed it, largely because the job I’d left had drained me of my self-confidence (Wall Street had its perks too…), and shutting off the faucet to that frothy paycheck put me in an instant scarcity mindset.
I worried: What if I’d already peaked, in my early twenties? What if I made the most I’ll ever make at 23 or 24? That was the fear, along with an even bigger one: What if I’m making the biggest mistake of my life and career, overestimating my abilities, and I end up sad, broke, and on the streets?
Yes, my mind 100% embraced that spiral — 10/10 do not recommend.
What came after, however, would prove that building a cash cow business and earning more in hours than I’d earned in years had its drawbacks — and they were significant.
In case this wasn’t self-evident, entrepreneurship attracts a very diverse crowd. By that I mean, people come here for a lot of very different reasons.
Here’s the reason we’d all tell investors: We couldn’t live with ourselves if we didn’t solve whatever problem our venture supposedly tackles.
Right. I might believe a small percentage of those founders, but in reality, the honest answers usually look a lot more like this:
Like many of you may have — or possibly will — I’ve bounced between a number of these motivations from time to time. As your entrepreneurial journey evolves, so will your reason for continuing to commit.
In the Desperation Phase, it’s all about survival. Plainly put, it’s get money or die, so you’re scrappy, a little unorthodox, and possibly willing to sacrifice things like your time, location, or reputation. However, once you build a name for yourself and a sustainable, healthy, or even very lucrative income, you may become more discriminating. In my case, this is exactly what happened.
After years of 6+ figure failures, I started to climb my way from nearly broke to building multiple concurrent cash-flowing (profitable) companies. Upon years of cutting unnecessary costs, slashing lower-ROI revenue streams, and refining business models, I created a couple businesses that can make 6+ figures with just a four-hour investment of my time. There are other operational and marketing costs to keep those businesses going and growing, but as far as manual time-to-dollars, the return is hard to beat.
For those thinking that makes the businesses risk-free, it doesn’t. Every time I make a major marketing expenditure, I have no guarantee it will generate the sales I’d like and turn a profit. If I spend $50k, I could make $500k+, or I could make $0. It’s hopefully on the upper end of that range (a 10x return isn’t too shabby), but there’s just no certainty until you execute.
Despite the financial risks I face with every major expenditure, a proven venture does seem more certain than a brand-new, unexplored one — and this very fact is what keeps countless entrepreneurs stuck in place.
The vast majority of entrepreneurs suckered into this gut-wrenching discipline share a common thread: They love to build.
They may not love to market. They may not love their customers. They may not even love their product. They love to build from something to nothing; that’s what fulfills them (myself included).
This is where the entrepreneurial wandering eye may rear its problematic head. At some point along your entrepreneurial journey, you may get the itch to begin another one. Here comes the dilemma you never thought you’d face: Should you sell your business or risk compromising its success on the impulse to embark on a new adventure?
I’ve scoured acquisition opportunities for nearly a year, combing through thousands (maybe tens of thousands at this point), all in the hopes of scratching that itch. Once you’ve built a fairly automated, cash-flowing business, why not sow your wild oats with a new challenge or two? Right?
That’s what I thought, until a few nagging questions inhabited my brain:
- If I acquire or start another brand-new venture, won’t that take time and resources away from my higher-priority cash-flowing companies?
- With all the time, resources, and energy I’d put into this new venture, would I be better-served evolving and expanding my current ventures into new markets and additional new offerings?
- Am I better off selling my primary venture altogether, so I can check the “cash out” box and move on untethered?
- If I do sell my current venture, is that giving up, since I didn’t take it as far as I could have?
- Why rock the applecart and compromise or give up the 4-hour-6-figure return I’ve engineered in my core markets with proven business models?
The first stage of entrepreneurship is liberating; that’s when you have nothing to lose. As you build profitable ventures, that ambitious, free-spirited, risk-taking demeanor changes. Now every new venture or client or consulting project you could take on represents an opportunity cost, rather than pure upside.
At first, your bar for success was affording your groceries. Now, it’s measuring up to your other ventures’ rate of return in order to deem a new one a worthy, astute entrepreneurial pursuit. Entrepreneurship used to be freeing; but sometimes, the pressure to maintain or outdo your own success is stifling.
The best thing about running largely automated, low time-intensive ventures is the unstructured blocks of free time — days, in fact — to learn, think, research, and explore. It’s part of the reason I was able to spend about 30 hours a week researching acquisition opportunities and real estate before making a strategic 7+ figure house purchase last year. It’s also part of the reason I’m able to dabble in multiple “secret” ventures that don’t make the LinkedIn, but most certainly do make the tax return.
If you can build freedom into your business — whether it’s a few hours or full days — one of the hardest choices you’ll have to make is to remove the ROI expectation and instead, allow yourself to learn, research, consume, and explore.
Coming from a finance background, I find myself perpetually self-scolding for time spent on non-revenue-generating activities. Ironically, the beauty of running a largely automated business is that my revenue and profit is hardly tied to the hours I work or the daily activities I pursue. Once you disconnect your time from your income and remove the guilt around no-ROI hours, you can hopefully free yourself up to make more informed, educated decisions about the next thing you do want to pursue.
Building a passive income machine or hands-off cash cow of a business is great. If it incentivizes you to stop learning, growing, or exploring, because you’re paralyzed by the comparatively lower ROI you’ll likely generate from most other ventures, that’s a hindrance and a problem. Some things in life are priceless; time to explore what drives you is one of them.
