Entrepreneurs know that failure is a piece of the puzzle. Not all failure is created equal. Two common types of failure.
- Minor – Learn, adjust, improve.
- Catastrophic – Game Over
As an entrepreneur two fast ways to catastrophic failure are poor personal finance habits and bad relationships. Below are a few ways to avoid them.
Personal finance in my opinion is a subject that schools neglect. It should be in the curriculum early and often. Whether you are an entrepreneur or not, these principles apply. Being an entrepreneur magnifies them. A good grip on your personal finance is a foundation for an attempt at building your own business with proper focus.
How to Avoid Trouble:
- Additional streams of revenue This can be as simple as don’t quit your job the second you decide you want to be an entrepreneur. That money will help fuel your dream and provide some financial stability. If you don’t have a full time gig build your personal brand. Search for speaking engagements or consulting. Independent contractor work is as popular as ever. Your tools will translate. Continue to develop them and make efficient use of your time. This protects your finances whether your business wins or loses.
- Know what you don’t know – I’m bad with numbers. If I look unhappy it’s because I’m working with numbers. Realizing that early I knew I needed to surround myself with those who are good with them. First I started reading books on personal finance. Rich Dad Poor Dad was the first one. In it Robert Kiyosaki talks about the importance of a financial advisor. When I was 21 I spoke with 5 financial advisors, picked my favorite and got started. She helped guide me as I entered the job force. As I got older I added an accountant to the mix. These services are necessary on a personal level before they are for your business.
- Pay Yourself – Being an entrepreneur is a balance. It starts with wanting to invest back into your own business. Then it’s investing in talent, retaining talent, finding any one to help you. The truth is the “Leaders Eat Last” mentality has a place but it’s not always at the start of a business. If you are in a constant panic about your finances you can’t focus on your business. Pay yourself. It will sting the bottom line. More important, it frees you to do what you do best. To focus, build, develop business around your concept. The rest will come with consistency.
- Live below your means This applies to everyone. I see peers making this mistake. You have a salary. You spend as if you have your salary plus $10k. You forget that you have your salary minus taxes. This puts financial stress on you. Read the Millionaire Next Door. It identifies seven common traits that re-occur amongst those who have accumulated wealth. In a nutshell “ they oppose the earn and consume” culture and live below their means. Today that culture has become See your friends consume on Instagram and consume. This is a dangerous trap for entrepreneurs.
Books to help:
- The Millionaire Next Door – Thomas Bradley
- Managing to be Wealthy – John Sestina
- Money Master the Game – Tony Robbins
Elon Musk said that Being an entrepreneur is like eating glass. Imagine being the significant other to someone who comes home everyday after eating glass? Heavy emotional swings can weigh on relationships and cause stress on top of building a business. For those single, dating can prove difficult and a distraction.
How to Avoid it:
- Communicate – Communication is a huge part of relationships no matter your occupation. As an entrepreneur it is less important to describe the details of your day. The importance lies in communicating why you are feeling a certain way. Details are difficult to relate to. Feelings such as “taking one step forward and two steps back” are relatable. Being an entrepreneur requires patience. Use this discipline with your communication. Be patient and have reverence for their feelings as well.
- Disconnect – One of the best pieces of advice I received from a mentor when I met Erica is date he. We were dating, but he knew she was important to me. If something is important you make time for it. Carving out time each week for your loved one goes a long way for you and your business. Allow yourself to find a time to disconnect from everything and focus your attention on them. Your re-entry to your business will be with clarity, renewed energy and focus.
- Have a shared vision – Dream big. Share your dream with your partner. Listen to his/her dream. Create your own dream together. When times are bad come back to your dream. As an entrepreneur the variables will change. Your vision stays true. When you share a vision you become a support system for one another working toward a common goal.
- Have a sounding board – Being an entrepreneur is a roller coaster. To the extent you can, don’t bring that stress home with you. Your spouse is a stake holder on your journey. Your freak out will cause a chain reaction. Bottling it up is not the answer. In comes a third party solution who acts as a sounding board. Perhaps it’s a mentor, business advisor, psychiatrist, or a friend who doesn’t mind listening. Unload on them as often as necessary. Sometimes you don’t need advice. Talking out loud about the situation will be a weight off your shoulders.
Books to help:
- Love and Respect – Dr. Emmerson Eggerichs
- The Five Love Languages – Gary Chapman
- Startup Life: Surviving and Thriving with an Entrepreneur – Brad Feld & Amy Batchelor* (Have not read this one yet).