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This article continues the series about the connection between entrepreneurship and personal growth called Entrepreneurs Grow at Warp Speed.
Overcome limited thinking
When you run your own business, you’ll see how your thoughts and beliefs impact your business results. Your personal limitations will limit what your business can do. The motivation to grow and improve your business helps you get your own beliefs in line since it can be painful to see your own beliefs holding your business back. Once you have some customers, they’ll encourage you to push through your personal limits.
Last week someone who’s been reading this series asked me if it’s possible to start a business when you’re broke.
Is it possible to travel to another country? Is it possible to learn to drive an automobile? Is it possible to read the entire Harry Potter series?
If you’re asking “is it possible” for people to do something that’s been done millions of times before, then I would have to say yes.
How many millions of times have people started businesses while broke or in debt? Being broke can be one of the best times to start a business since you have little or nothing to lose. If you fail, you’ll still be broke, and you can try again.
In some ways business is the great equalizer. Your potential customers probably don’t care how you started. They care about whether your business adds value to their lives. They may care about the impact you’re having on the planet. I’d say you’re more likely to receive extra praise for starting your business while broke than if you started out wealthy. People like seeing underdogs succeed.
Entrepreneurs get busy solving problems. If you like solving problems, your business will provide you with an endless stream of interesting problems to solve.
To think like an entrepreneur, take all your “can I…” questions, and put the word “how” in front of them:
- How can I start a business while broke?
- How can I overcome a weak education?
- How can I motivate myself to work hard?
“Can” questions make sense when you’re referring to things humanity has never done before, like Can we safely send humans to Mars? or Can we build a teleportation device? or Can we make two good James Bond movies in a row?
It doesn’t make much sense to ask such questions for things we’ve already done millions of times before, like starting a business while broke. You can start a new business in an afternoon.
Learn to spend wisely
Business is a great teacher of money management skills. As an entrepreneur you’ll get to buy and sell more often, so you’ll train up faster in this area.
When you first start out as an entrepreneur, you’ll learn that you’re either too loose or too tight with your money.
Being too loose is usually the more common problem, especially if you have some funds to start with. During your first few years as an entrepreneur, you’ll probably make some questionable purchases by justifying them as good investments. I once bought a new $700 photocopier for my office, and we probably made less than 1000 photocopies per year. It’s easy to buy wasteful luxuries when you’re flush with cash, but when you go through several cycles of boom and bust, you’ll learn to be a little more conservative at the high points instead of spending money just because you can.
Being too tight with your money is also risky because you’ll pass up good opportunities to increase productivity. Some expenses that may seem unnecessary can actually pay nice dividends. Upgrading a sluggish computer is often a wise investment.
Earlier this year I replaced the lighting in my home office after stumbling upon some research suggesting that light in the bluish part of the spectrum is better for productivity. At first the results looked unnatural to me, like something from a sci-fi laboratory, but after several days I got used to it. The more bluish light makes me feel more awake, alert, and stimulated than the yellowish halogen lighting I used before. What seemed like a fluffy purchase turned out to be a worthwhile investment.
One of the most important lessons you’ll learn is how much to spend to get your business up and running. I recommend starting out very conservatively. It usually doesn’t make sense to spend much money until you test your business idea in the real world. Once you start making money, you can scale up your expenses as needed, but until that happens, treat every dollar as precious.
Having to make business purchasing decisions again and again — and dealing with the consequences of bad purchasing decisions repeatedly — will help refine your spending habits. You’ll learn to make wise investments without being wasteful.
Enjoy the light side, but protect yourself from the dark side
Generally speaking there are two ways for people to do business together: control or trust.
If you can control someone, you can simply dictate your terms, and they’ll do business with you.
There are two primary ways to control people: silver or lead. You can bribe people with silver, or you can threaten them with lead (bullets).
The promise of a reward or the possibility of becoming a bullet-ridden corpse can be very motivating. Once the silver or lead has been delivered though, the motivational effect fades. So the offer must remain active for business to continue.
Of course you can use silver and lead together. And of course there are many variations on this style. A company may try to control its employees by offering stock options for good performance combined with disciplinary measures for poor performance. That same company may use entirely different methods to motivate its customers, such as discounts or late fees.
The second way to do business is with trust. If you cannot control someone’s behavior, you can still do business with them on the basis of trust. This approach can work well in high-trust cultures where enough people have business-friendly values, such as believing that fair exchanges are good and that theft is wrong. In cultures with such values, business can flourish on the basis of trust.
In practice many small businesses begin with a trust-based model and then apply control-based strategies to the problem areas. More savvy entrepreneurs will anticipate where controls are likely to be needed and establish them early.
Suppose your business sells products online. You may offer products that provide good value at reasonable prices. You may present those products honestly. You may design the ordering process to be simple and straightforward. If all of the people who connect with your business are honest, you’ll probably do just fine. In the real world, however, such a business may attract a lot of fraud as well. Some people will try to devise ways to steal your products without actually paying for them, such as by using stolen credit cards. You’ll eventually learn to taper your optimism with some practical control strategies, such as by taking steps to reduce fraud.
How does this type of learning experience benefit your personal growth? Your business will give you more frequent exposure to the light side and the dark side of humanity. This can help you release some naiveté and develop a more realistic understanding of human behavior, which can save you a great deal of trouble elsewhere in life, such as in your personal relationships.
The more successful you become in business, the more you’ll expose yourself to the best and worst of humanity. Because of my business, I’ve had the opportunity to connect with some wonderful and amazing people, including my girlfriend since she and I met at one of my workshops. Simultaneously, my business has also increased my exposure to some of the worst aspects of humanity, such as receiving threats of violence from people I’ve never met.
The challenge is to mature beyond your child-like innocence without descending into paranoia and cynicism. Can you learn to protect yourself from the worst of humanity while still being able to access the best of humanity? That is no easy balancing act.
Understand human behavior
In business you can learn a great deal by running experiments that you can’t easily do in your personal life. In fact, such experimentation is expected, and people are generally pretty accepting of it as long as you don’t go crazy with it. You’ll learn a lot about human behavior along the way.
Business often rewards experimentation. Your first attempts at any policies or procedures will be guesses, and many of your guesses will be wrong. Once you have some customers, you can test other possibilities, and pretty soon you’ll improve upon your early guesses. You’ll discover better ways to generate sales, reduce expenses, prevent fraud, increase your productivity, and more.
I love to experiment in business because the results sometimes surprise me, and those surprises can give me deeper insights about human nature.
In my computer games business, I decided to test a money-back guarantee on all game purchases, which was unusual in the industry during the years I did it. It also seemed redundant since my games had free demos anyway. But I tested the idea and found that it worked well. Even with a money-back guarantee on downloadable games, refund requests were negligible. What surprised me was that this policy also significantly reduced fraud because people who might otherwise try to get games fraudulently would instead buy them with the intention of returning them later, but most of them never bothered to ask for a return. I liked this policy because it didn’t hurt the honest customers, and it helped reclaim some positive business from potential customers who might otherwise have hurt the business with extra chargeback fees.
Another friend from that field devised a special “hacker discount.” When his software caught people trying to input stolen registration codes, he’d refer those people to a special web page offering them a 50% discount to actually buy the software instead of trying to steal it. He got some positive feedback and some extra sales from people who appreciated the creative approach.
I often find that experienced entrepreneurs are socially savvy in ways that non-entrepreneurs usually aren’t. Running a business gives you frequent exposure to aspects of human behavior that you might not otherwise see very often. Through business you’ll come to understand many behavioral nuances that defy simplistic labels such as good or evil. In the long run, this can help you become a more functional human being, partly because you’ll understand other people better and also because you’ll deepen your understanding of your own behavior. Such understanding can yield major payoffs. Imagine how much you’d gain if you could learn how to consistently motivate yourself, for instance. Do you already know how to do that? If not, the lessons of entrepreneurship can teach you.