1. Financial risk
Without a doubt, to embark on entrepreneurship is to put your personal finances at risk. First off, most businesses require some seed financing at the start. Unless one is extremely lucky, where else would this come from if not from the entrepreneur themselves? There can never be any certainty to recovering this capital. Still, this is not the scariest part. Many entrepreneurs enter into business already prepared to lose their seed capital.
What many entrepreneurs eventually find most worrisome is the uncertainty of income. Since costs are generally fixed, for every month that income does not cover obligations, the runway for a business to take off shortens. Many entrepreneurs can recount stories of foregoing or delaying salaries just to try to extend a fast shortening runway. It is the inability to foresee and plan around future income streams that causes loss of sleep for even the toughest of entrepreneurs.
And then there’s leverage. Whether to seed the business or to extend the runway, some entrepreneurs put all of their personal finances on the line by refinancing their homes or turn to personal loans and microcredit for help. This has caused the ruin of many failed entrepreneurs.
2. Dealing with partners
There is a saying “Nothing great was ever achieved alone”. Many entrepreneurs enter into business with partners to share the vast array of responsibilities and jointly reap the rewards.
However, while partners can be of great help, getting complementary partners is really somewhat a thing of luck and experience. It is not uncommon for entrepreneurs to describe their partners as being deadweight, or even worse, a complete nightmare. In fact, some entrepreneurs have been sued simply because of the misconduct of their partners!
But unfortunately, partners are not as easily removed or replaced as employees. While arrangements may vary from case to case, partners usually have ownership and a say in how business is being run. Many times, the only way to get rid of a bad partner is to do a share buyback, or even to walk away yourself! Think of what happened between Mark Zuckerberg and Eduardo Saverin at Facebook.
3. Commitment and lifestyle strain
Venturing into your own business requires absolute commitment and a whole lot of sacrifice. Those seeking work life balance would do well to think twice. It is not conducive to family life, and you should expect to lose most of your free time. Still, many first time entrepreneurs say they are prepared for the commitment of time and the amount of hard work involved.
What surprises them however, is the tremendous amounts of stress that they experience. Despite the best efforts to manage it, the stress still finds a way to encroach upon and erode quality of life. One problem common among entrepreneurs is how difficult it is to switch off even when not working. For some, sleep becomes difficult and nights become long. Being unrested for extended periods only adds to the difficulty of the whole experience.
4. Ruined relationships
Many experienced entrepreneurs warn against working with close friends and relatives in any capacity. But it is not uncommon to rope in friends and family to help out at the start. And since starting a business can be a very stressful experience, it can put a lot of strain on relationships. It comes as no surprise that many relationships have been ruined in the process.
5. It gets lonely and can feel hollow
The challenges and stresses that entrepreneurs face are in many ways unique. Most people never get to experience this amount of stress in their lifetime. As such, many experienced entrepreneurs attest to the difficulty of finding someone to relate to.
This becomes especially pronounced when the business is going through a particularly difficult patch. Like any human being, entrepreneurs too may want to share freely with others in such times. But many feel trapped and unable to do so. The overarching concern is having to show unwavering strength so as not to jeopardize team morale or confidence in the business. For this reason, many entrepreneurs have described feeling conflicted and hollow.
6. Risk to Reputation
One of the biggest unspoken fears of any entrepreneur is that of failure. While there have been efforts on some parts to dispel the stigma associated with failure, it is undeniable that reputations can still be ruined from broken promises, unfulfilled contracts and disappointed investors. And apart from financial ruin, the risk to reputations is what many entrepreneurs find most difficult to live down.
If you are aspiring to be an entrepreneur, take courage. While it is important to know the travails that may lie ahead, despite the challenges, entrepreneurship can ultimately be a very rewarding experience.
And to all the entrepreneurs out there, good luck and keep fighting the good fight!