You own a business, or you’re thinking about starting one. Congratulations! Whether you’re freelancing, consulting, or selling a product, it’s one of the most enriching things you can do personally. Beyond eliminating your wage ceiling, owning a business will force you to challenge, improve, and learn about yourself.
(And yes, Fellow Freelancer. You are and entrepreneur. You’ll feel the same ups and downs as every other entrepreneur who’s done it.)
The ups and downs loom large, especially the downside. Namely, that big one that you can’t avoid: you won’t have a steady paycheck. And even if money isn’t an issue for you in you business, there are other problems you face that make the highs and lows swing bigger than Babe Ruth.
This is The Entrepreneur’s Rollercoaster. Welcome, Dear Rider: admission is free and required for every entrepreneur. Oh! And one final thing:
You can never leave the ride so long as you’re an entrepreneur.
What’s Going On With This Rollercoaster?
Pinpointing the reasons behind the rollercoaster aren’t so easy while you’re on it. After spending the better part of the last four years on the rollercoaster myself, I’d boil the rollercoaster down to two main issues:
- Financial problems
- Growth problems
For each financial or growth problem you face, you’ll have a corresponding victory. If you don’t have a corresponding victory, you’ll probably be out of business. Each low is matched with a high, and vice versa. Your ongoing battle is to even out the highs and lows as much as possible.
Here’s a picture of the rollercoaster (forvige my amateurish drawing):
I think of every business as having five main phases. The Honeymoon is the beginning, when you’re so excited that you feel completely bulletproof. The Realitythen sets in, and you realize how tough it is going to be. The Revenue saves the day, giving you validation with more money in the bank. The Dip inevitably comes, when things slow down and you’re starved for positive feedback. And if you can survive this long, The Machine means you’ve mostly solved your early money problems, and you’re in a period of experimentation. It’s characterized by growth and contraction, which usually minimizes the height of highs and the lows.
The first problem is usually getting money in the door. This is the hardest problem to address, because you’re essentially trying to go from nothing to something. From “this business doesn’t exist” to “pay me handsomely for the awesome things I can do for you.” It’s your first challenge.
Once you get past that, your next financial problem is investing in delivery. Namely, you’ll be asking yourself “How can I do this faster/better/cheaper?” Your answer will invole a capital investment (machines, software, etc.) or a labor investment (hands to help you out), or both.
This in turn will create a new financial problem: the money you were making before is now insufficient to keep up with the investments you made. So you’ll need more leads, more sales, and more delivery to keep the machine humming along.
There’s a delicate balance to maintain when it comes to growth. You want to grow enough to increase the profit of your business, but not so much that growth becomes inefficient (and therefore not profitable). You can think of it like walking the highwire: go too slow, and you become fatigued; go too fast, and you’ll probably lose your balance. Either way, you’re goal is to continue walking on the wire without falling off.
As you attempt to solve your financial problems, you’ll inevitably be faced with growth problems. Things like hiring, firing, building systems, improving operations to become more efficient, investing in more scalable systems. And with each growth problem comes a new financial problem. The two feed into each other, and it’s your job to balance them.
Feedback Loops On the Rollercoaster
Sure, you’re going to have a financial and growth problems. But the reason for the rollercoaster is feedback loops.
Every business has a money problem in the beginning. Whether you raised money or are bootstrapped, you’re in a race against your bank account to bring enough money in the door to sustain your business in its current form.
As you’re racing against zero (or even mounting debt), you’ll see signals that things are working. You’ll also see signals that things aren’t working. The best signals are sales, but you’ll also have proxy signals. What they are will depend on your business, but they’re probably things like:
- Sales Pipeline
- Client Feedback
All of these are great, but they won’t pay your rent or mortgage. And even if you solve your money problems in the early days, you’ll almost certainly apply leverage to your business. That means your potential gains are much greater, but so are your losses.
Which leads me to the dirty little secret of entrepreneurship: no matter where you are in your entrepreneurial journey, you’re still on the rollercoaster. Or you can think about like this instead:
You’re always on the rollercoaster.
Why the Rollercoaster Never Ends
Yesterday’s problems may be solved, but you have new problems to tackle today.
When I was 19, I was making $11/hour working for UCLA Network Services. I helped maintain the physical network on campus. It was an easy job that required a little know-how, but it mostly required lifting heavy power supplies.
The next year I got a huge pay raise to $14 to build and troubleshoot computers. This job was slightly more challnging, but wow! I felt rich with that $3 pay increase. But what happens next to my perception of money, Fellow Human? I wanted more money, of course.
The same thing is true of your entrepreneurial journey. What once seemed impossible (“Who would pay me X dollars to do Y services for them?”) is now proven and you’re onto the next problem (“Who will pay me 2X dollars to do Z services?”).
Needless to say, your threshold for success will continue to move up as you experience more success. Said another way, today’s win may feel like tomorrow’s loss.
The other reason you’ll never get off the rollercoaster is the nature of feedback itself. Some days, you receive such overwhelmingly positive feedback that you’re sure you’ll be vacationing 3 months a year in no time. Most days, you’re lacking feedback. You just don’t have enough to make positive or negative judgments. And other days, you receive feedback so negative that it feels like Arnold Schwarzenegger crushed your soul in his meaty palm.
Assuming we can agree that you’ll never get off the rollercoaster, the question is: what do you do about it?
Living On the Rollercoaster
Living on The Entrepreneur’s Rollercoaster is a condition. You have it now, you’ll have it tomorrow, and there’s nothing you can do to completely get rid of it short of quitting.
Like any condition, there are two ways to attack it:
- Address the causes
- Manage the symptoms
All you can do to make life on the rollercoaster more comfortable is minimizing the highs and lows. Think of yourself like a Buddhist trying to find The Middle Way: you can’t eliminate the pain, or the excitement, but you can do a better job of controlling it.
Addressing the Causes
The first cause of living on the rollercoaster is entrepreneurship (or freelancing or consulting) itself. You can’t do anything about that.
But money and growth problems? You can address those. In my experience, the hierarchy of the causes of stress starts with money, then goes to leverage.
Address the money problem first and always. Money in your business is the same as food and safety on Maslow’s hierarchy: you’ll never think about anything else until you take care of it. Money, in a real sense, is food and safety.
After you address money, you’ll want to address growth and leverage. If you’re doing well, you may feel like you’re driving a Porsche down the Interstate. That’s all well and good until you the speedometer hits 120mph and you drive through an oil slick in the rain. The faster you go, the higher the stakes. Travel at a speed that you’re able to comfortably withstand, especially when something goes wrong. Something always goes wrong.
Managing the Symptoms
Since the cause of living on the rollercoaster is entrepreneurship itself, after making enough money, managing the symptoms is your most important task.
In a real sense, stress is self-imposed. Most of the time, the stress you feel is much worse than the likely outcomes you’re facing.
In the first five months of my freelancing career, I experienced the following, and in this order:
- Made more money than I ever made in a month
- Quit my dayjob and hung my shingle as a freelancer
- Started a new business with a partner with a huge following, and brought in $70k in revenue in 6 weeks
- Quit that new business after 6 weeks and went at it alone
- Made half of what I was making before
- Went a full month with no income
- Had an existential crisis
Welcome to the rollercoaster! It’s na wild ride.
After all of that stress, culminating in a full month with no income, I had a two panic attacks. It wasn’t the fall-on-the-floor-hyperventilating kind you see in the movies, but it was awful. The panic included an elevated heart rate, shallow breathing, and an overall feeling of my world ending. It’s the same way I’ve felt when I narrowly avoided a car accident: like I could die in a matter of seconds.
Luckily, the reality of entrepreneurship is not life or death. It’s hard to see it in the moment, but it’s true. And after my second panic attack, I committed to addressing the symptoms.
What I’ve found is that staying healthy is the best way to control the symptoms of life on the roller coaster. You can’t eliminate the highs and lows, but you can minimize them.
My advice to you, fellow entrepreneur, is to stay as healthy as possible.
Stay physically healthy by getting exercise and plenty of sleep every day. For me and my D-dominant personality, exercise is the single most important way to stay sane. It may not be for you, but it’s absolutely essential for me.
Stay mentally healthy by investing in relationships and time away from work. Humans are social creatures, so you need plenty of rich interaction with other people. That includes your partner, friends, and family. Entrepreneurship can be quite lonely, too, so it’s good to have friends who are also entrepreneurs and can relate to your experience.
Your time away must include things you like to do. For me, that’s exercise, hiking, making music, and writing. I try to combine my physical and mental health activities as much as possible. My wife and I like to walk together with our dog. I make music for my podcasts and videos for work. My friend Philip has been building his own speakers from scratch in a machine shop. My friend Kai goes to Burning Man. Whatever works for you, do it.
All of it will help you stay a little more healthy and sane, and even out the peaks and valleys of the rollercoaster.
Life on the rollercoaster is exciting. Entrepreneurship is personally enriching and the fastest learning experience you’re likely to have.
Adapting to life on the rollercoaster is your challenge, and mine. And as long as you’re an entrepreneur, the ride doesn’t end.
I’d love to hear from you: what do you do to adapt to life on the rollercoaster?
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