Can I Become An Entrepreneur?

Readers, I’m considering getting a job. I’ve been working for myself since summer of 2006: exactly 17 years. I’ve built and sold a business. I restarted my entrepreneurial journey last year, and I currently have a healthy consulting practice, do paid public speaking, and host a prominent podcast for LinkedIn. By most accounts, I'm a successful entrepreneur.  But I’m anxious. Juggling all my roles and responsibilities-- not to mention the constant hustle-- is wearing on me. For years, I felt my mental health challenges were better suited to a life where I controlled my time and had lots of flexibility. The financial risk didn’t bother me that much. Now, I feel that being self-employed might be triggering more anxiety than organizational employment might. 

This is because one of my key anxiety triggers is money. When money feels scarce and financial security feels out of reach, my anxiety takes over. Now, for many years that insecurity anxiety was outweighed by the fact that I had incredible autonomy and the ability to do work I loved, on my own terms. But this moment in time feels scary, and the potential security of employment feels more urgent than freedom. Does that resonate with you? If it does, read on, and below we;ll look at some numbers.

As I explore this question for myself, I’m reminded of a question I get a lot from listeners who have more traditional jobs and feel their mental health at work is taxed: should I try to make my corporate job work, or go out on my own?

To stay in a job, or to try it on your own… both scenarios bring huge pros and cons. I think too many people are drawn to the allure of entrepreneurship when the reality is really, really, stressful. A lot of people glamorize entrepreneurship.

My podcast guest Michael Freeman is an entrepreneur, psychiatrist and professor at UCSF who studies entrepreneurs and mental health. He co-authored a famous paper about entrepreneurship which opens with this truth:

Entrepreneurs – as a whole – make less money, face more work- life conflict and endure a lot more failure and uncertainty than the more traditionally employed. Freeman has written that it’s possible to question the decision making capabilities of entrepreneurs…for choosing that kind of life. And yet, millions of us do…and we often feel we must be entrepreneurs. Sometimes it's really not that kind of a choice. 

I think of entrepreneurship as having both push factors and pull factors. A lot of people do their own thing because they feel they're being pushed away from their employment for various reasons. Other people become entrepreneurs because they're being pulled towards creativity or a vision or a desire to create and start something. And, and sometimes it's probably both. 

I’m a necessity entrepreneur. When I was 30 years old. I realized that because of my mental health challenges and because of a lot of who I am temperamentally, achieving the kind of success I wanted in a corporate structure was going to be fraught and unlikely.  Freeman concurs that people who go out on their own often know “that you're different in ways that make it hard to fit in. And the parallel emotion is this drive for autonomy and independence and the sense of self-reliance and self-efficacy.”

Freeman told me, “The allure of entrepreneurship is so powerful and the distaste for the kinds of jobs that are out there in the economy is also pretty strong. I do advise people early in the journey to really, really think through if it's a good fit.”

So, should you stay or should you go? I don’t know about you, but when it comes to my mental health, I know that managing my anxiety around money is key. 

I can’t tell you how many people I’ve spoken with who noted that the biggest barrier they feel to putting in place the work life they want is the fact that they will need to deal with their cash flow. Control over your cash flow buys you freedom and flexibility.

So I thought I’d share this extremely basic tool with you. I call it “Your monthly nut.” If you’re going to work for yourself, you’re going to have to look money squarely in the face. It always comes down to, “Do I have enough?” The barrier to being an entrepreneur for most people is the fear that you will not be able to earn enough money to support you or your family.

And so this tool will help you get started-- it has the added benefit of helping manage money anxiety. When you know the numbers, your anxious mind is forced to look at facts. Facts take the teeth out of anxiety.

So give the truth a cold hard look and put the numbers on paper. Figure out your Monthly Nut. There is no magic here, no thinking and growing rich! You must be realistic and set up the financial structure you need.  

Here is how it works if you own a small business. Your monthly nut is all of your business expenses. Figure out how much cash you need to generate to cover the nut. Set up a spreadsheet (I use Google Docs) and add a line for all your fixed expenses. Your accountant might use a financial statement for this, but I find accounting speak, even after all these years, confusing, so I put the terms in my own language. Here are some general categories you might consider:

The total is your nut. To break even, this is what you must earn.

Other expenses will come and go, of course. I might have a business trip or one time expense that comes up that I need to pay for. You can handle these as they arise. The nut is simply those bills you need to pay every month. Once you know this number, you know how much you need.Here’s a way to calculate your personal monthly nut- especially helpful if you are a freelancer, or your business income and personal income are one and the same.

I realized I was never going to download receipts or actualize my spending into Quicken. But every six months or so, I adjust our monthly personal budget and make sure it’s as accurate as possible.

I consider this the first step in answering the question, should I stay or should I go?

Want to talk about this? My friend, executive coach and business owner Nihar Chhaya and I are going to be Live on LinkedIn Thursday at 1pm ET. Join us! 

I’ll follow up with more on these considerations next week after our Live.

Morra