"Success isn’t about how much money you make. It’s about the difference you make in people’s lives." - Michelle Obama (First African-American First Lady of the United States)
I was enjoying my corporate career. I had reached a place where I was doing what I had always wanted to do since I was five years old. Of course, I always had plans to “do my own thing” at some point, but I sincerely thought this would happen in my mid-to-late thirties. Well, God had other plans. There are a few things that I did not realise until I was on the other side, and I would like to highlight the three major ones in this post.
1. Just how expensive it is to hire people
Depending on the type of business you’re starting, you may need to hire only a couple of people, or you may need to start with a team of ten or more. The skills and education level of the people you need to hire will also be dependent on your industry. You may be able to outsource some roles. For example, I typically hire someone on Upwork when I need to do some tedious data entry work that feeds into my business analysis spreadsheets. You can get someone to do it in under one hour for as low as £5, whereas it may have taken you hours. Perhaps you may need to hire a social media manager for your store or business.
Hiring someone is an ongoing cost. Whether they are on a contract or full-time, their wages are now a part of your monthly expenses. This means that you have extra pressure to meet these costs or otherwise, you need to have enough money in the bank to cover your staff expenses till you break even. I have heard too many stories of Nigerian companies not having the means to pay their staff. I’ve had friends who work at seemingly reputable companies, but they have not been paid for a couple of months. Hence, I believe it’s essential also to model what point in the business you will need to hire more staff and what this means for your bottom line. Sometimes the need for more staff increases faster than your revenue. Furthermore, legal and admin expenses are always associated with hiring people—for example, pension contributions, medical insurance or health insurance. Again, numerous services charge you per month per user if you have a corporate firm, e.g. Microsoft Business 365. This can bloat your monthly expenses very quickly. Finally, you may need to hire a recruitment or HR agency to help you search, screen, interview and onboard candidates, which will cost you.
2. Just how essential people are – you can never do it alone
Even though I have just highlighted how expensive it can be to hire people, you will soon learn very quickly that you need to have a second or third pair of hands once you start your business. The seven main functions of a company are: sales, marketing, finance, customer service, human resources, research and development, production, and distribution. The functions will vary by industry. However, your strengths will most likely not be in all these areas, and even if they were, there are only 24 hours in a day, and ideally, you should not be working for more than 14 hours. If you’re opening up a restaurant, your strength may be curating the menu and cooking in the kitchen, but the business functions such as accounting and financial planning may not interest you at all. However, if you don’t get a grip on this, your business is over before it’s even started. You also need a meticulous lawyer that thinks ahead and has experience doing company law in your industry.
If you’re building an app and you are not a technical founder, you need to hire a team of developers. You will always need to hire people to fill the gap. However, this introduces a severe risk to your business. Talent can be hard to find and retain, so you must plan how to search, screen, interview and onboard talent into your business. Are you going to post ads on LinkedIn, use your network, put posters on your shop front etc.? The talent you need may also be at management levels. There are numerous websites where you can look for co-founders because it’s becoming more documented in the startup space that you are more likely to receive funding if you have a co-founder. It also looks better if you have at least one technical co-founder if you have a tech company.
3. Being a founder is very lonely
Your time and mental energy gradually become about your business and your business only. We all know the stereotype of companies engulfing their founder’s life. Most founders struggle to find the balance. I even had to Google “Founder depression” at one point. If you’re not careful, you can find yourself on a constant whirlwind, especially if you make the grave mistake of attaching your self-esteem to your business. I think the journey is a lot lonelier when you have not launched. When you are building your startup or establishment, it’s extremely stressful. During this period, you find out that things will take longer than you thought, and some things you thought would go smoothly are just going south right before your eyes.
This stress can be extremely high if you are bootstrapping and discovering along the way that the business will cost you 3x what you estimated. Unless you have peers who have started similar businesses in your industry, you will struggle to find someone who exactly knows what you are going through. This is why it’s crucial to find founder support groups. This may be in Whatsapp group chats or subreddits such as r/entrepreneurship or r/startups. If you have a co-founder putting in the same effort as you, they may be able to pick you up when you are low and vice-versa. However, if there is an imbalance in your co-founding relationship, this can also be dangerous to your mental health. Therefore, ensure you never enter business with someone that you have not vetted how they work before. Even if it’s family, unless you know how they work and have delegated the tasks you will be responsible for in the beginning, don’t do it. Instead, I advise you to take the Myer Brigg’s personality test or Clifton Strength’s assessment so that the founding team have a profound sense of everyone’s strengths and weaknesses before you embark on your entrepreneurial journey.
Hopefully, this post has helped you foresee some traps to avoid before you start a business. Let me know if there are any things that you didn’t realise until you started your business in the comments. You can also check how to save money as a startup here.