Does setting up a startup pay off?
More often than not, when speaking about setting up a startup, other people are surprised. Why this way? IT specialists earn so much these days, why do you want to take such a decision?
These questions seem sensible. Statistics show that only one or, according to other data, two startups out of ten manage to survive.
What’s more, when you start creating a startup, you don’t know much about what you’re doing. I think that if people who set up their startups were aware of the difficulties they are about to encounter, a majority of them wouldn’t make this decision.
And in spite of all of that, there is something really appealing in running a startup. Vinod Khosla, an American businessman born in India encourages everyone who feels a desire to run one’s own business, to make a decision about setting it up. You can say – OK, his wealth is worth over billion dollars, so he does have reasons to be satisfied.
But even those who had failed many, many times, still decided to try once and once again.
Professor Władysław Bartoszewski once said, that there are things worth doing, and those that pay off. Not everything worth doing pays off, but also not everything that pays off is worth doing. I think that it also sums up really well the dilemmas that a future entrepreneur encounters when setting up a new business. The risk is very high and more often than not it will turn out that his startup won’t be profitable. But it sure is worth the effort put into it.
Jacek Walkiewicz, a psychologist, once had a lecture at the TEDxWSB, during which he was telling about how he was realizing his dreams. For 20 years, he had been dreaming of buying an RV. Eventually, just before his forties, he decided to make his dream come true. The car costed him 100 thousand zlotys, but he could afford it. He did what he had been dreaming about for so long. And what? He didn’t even use it for 11 months because he didn’t need it. This did not pay off. But it was worth it.
One of human needs is the need to create and develop. It appears through everybody in different ways – maybe it’s the reason why some people find it hard to understand the artists who paint pictures their whole lives.
It’s also interesting that this need cannot be fulfilled. Even if we create a lot, we will never reach satiation compared to the one we reach when we are e.g. hungry.
Does this mean that startups’ owners do it for the idea rather than money? Quite the opposite – I think that every entrepreneur hopes that his business will bring profits (or at least every one should). And if he decides to run a startup, then he expects even higher profits than at regular companies.
Regardless of the result, it’s something that gives you lots of experience, valuable lessons, and satisfaction. Next to the need to develop, there’s also e.g. the need to be valuable – to be noticed, respected, and accepted. The problem emerges when the lack of self-esteem is replaced with the company – the will to show that we can achieve something. It suddenly turns out, that all failures, other people’s comments, or daily difficulties in business are taken as an assault by the world around us. They lead to the spiral of sadness. But this is a topic for a separate entry.
Ok – if somebody feels a calling to be an entrepreneur – then it’s worth it, but will it pay off? It usually won’t.
Statistically, best businesses are the completely ordinary ones – Quora is full of posts from people who boast about the money they earn e.g. by trading on Amazon. If you look for a fast, stable source of income, then stay away from startups.
Jack Ma, the founder of Alibaba, said that at the beginning of his business he had met dozens of investors, and their business hadn’t been bringing any income for 3 years.
What would an average accountant say about that? The business needs to be shut. But after a few years, Jack Ma became one of the world’s richest men.
In any case, Jack Ma is the example of the man who was shown by life something completely different from what most people think – in his case, a day job didn’t pay off. Looking for a job before setting up his company, he applied to 30 different companies and his applications were declined everywhere. In the new KFC building, all 24 people who applied were employed, except from him. He tried to get into Harvard… 10 times.
Later, his 2 businesses were also failures.
So do startups pay off – they usually don’t, but if they do – then the profits are huge.
Even if it doesn’t pay off at the first, second, or fifth time – it will eventually. If you draw conclusions, it will come off.