One year in: what I’ve learned

It’s official: I’m one year in as a full-time entrepreneur. No part-time job to pay the bills, no full-time job supporting the mortgage while we “get the plane off the ground.” Zero support outside of the business we’ve built.

It’s a massive milestone for many reasons. Countless people want to start a business, but never get far enough to quit their day job. Countless others start their business, but don’t last 6 months, let alone a year.

Here’s the 3 most important lessons I’ve learned from my first year as a full-time entrepreneur and business owner.

1. A salary plays tricks on your mind.

After college, I was ecstatic to be making twice as much money as I ever had in the past. Year over year, I played the game of finding roles where I continued the upward trend — and my lifestyle followed.

I began playing math games with my future. If I continued a trend of year-over-year 5%, or 10% increases, where would I be in 10 years? 20 years? What would my 401k look like at that point if I maxed it out?

My life, my future, my goals…everything centered around how much of a salary I could extract from the highest bidder. My frame of reference for life was “how much do I make per year?”

In a moment of clarity, I realized that I was giving up my freedom in exchange for the right to play this game. I didn’t have control over my life — even in working my way into an executive role, I would never have the control over the direction of my time, or the direction of the company where I spent my efforts.

It’s not until you actually give up that money that you realize what you gain in return. I haven’t yet made the money I was making as a salary man — but what I’ve gained in return is far more valuable.

The pride in actually building something far exceeds the rush from a bonus, or seeing my W-2 at the end of the year.

Unfortunately, it’s not something you can quantify. You have to experience that feeling yourself.

2. You gain a much better understanding of the C-suite when you start a business.

In business school, you learn about the “principal-agent problem.” In short, the owners & investors (principals) in a business will naturally make different decisions than the employees.

When employees’ attitudes and behaviors are more aligned with those of the principals, you typically see those employees do better with promotions, leadership opportunities, etc.

But what are those attitudes and behaviors? It’s very difficult to describe how you approach problems, competition, pricing, product, strategy, if you’re not responsible, legally and financially, for the results of those decisions. And there’s really no way to bridge that gap without significant ownership interest.

We’ve put up our own money, our own savings, sacrificed time with family, friends, our health, and, frankly…our sanity to get this far.

That’s what the C-suite does. It’s all about legal and financial responsibility for decisions. Until you’re actually accountable, you won’t completely get it.

There’s no way to do that without either climbing the long ladder up to the C-suite, or starting a business from scratch.

3. You view the marketplace differently.

As an employee, even in executive positions, the majority of your mental effort goes into planning and executing on the current (fiscal) year’s plans.

Most employees are necessarily deep, deep in the weeds, executing important tasks on projects for weekly, monthly, or quarterly deliverables. Heads down, focused. And for good reason — if you’re going to win, you need focused, capable, engaged employees.

Even leaders of these teams don’t spend a ton of time in long-term vision. You may have a yearly budget and forecast you’re executing on. You have a series of projects your teams are responsible for to meet that forecast. You’re reporting those numbers up the chain, adjusting things as the year passes to keep on track.

Nowhere in this process does the typical employee ask “will this industry exist in 5 years?” “What happens if the President decides to outlaw a critical component of our business?” “What happens if our raw materials quadruple in price?”

As an employee, my plan B was getting another job — which was never too hard in our economy. Business owners have to think about these things because their future depends on it.

Now, as an owner, there is no plan B. If the environment in which we operate our business changes, failure isn’t an option. There is no “another job.”

I often think about how I’d behave differently as an employee, were I to choose to go back to the corporate world. It’s not an option — but I know that I’d certainly have a different take on the world.

Employees can take these lessons and use them as helpful thought exercises, but there’s no escaping the principal — agent issue. As long as they’re not (technically) responsible, it’s not fair to expect an employee to 100% act as though they are. It’s up to leadership to understand that — and to build an environment where employees can thrive regardless.

But like I said — no plan B. We’re just getting started. I’ll be excited to see what I learn in the next 12 months.