“Every worthwhile accomplishment, big or little, has its stages of drudgery and triumph: a beginning, a struggle and a victory.”
Mahatma Gandhi wasn’t talking about running a startup, but he might as well have been. Everyone who has ever tried to start a new business can relate to that sentiment. You can feel like you’re on top of the world one day, then down the next. If there’s one constant, it’s the sheer range of emotions and experiences that can affect you from one day to the next.
Riding the roller coaster can be tough. It’s easy to advise others to ignore their emotions and plow ahead anyway but that can be a tall order when you’re the one actually experiencing the inevitable peaks and valleys that every startup experiences. Here are a few ways we can cope with the ups and downs of running a startup:
Related: 7 Dark Truths About Entrepreneurship
1. Acceptance is the answer
Life as an entrepreneur is often more unpredictable than a 9-to-5 job. This should go without saying but when you’re experiencing a down time, it’s easy to forget that another up is probably right around the corner. Your highs are going to be higher and your lows lower than most. Once you accept this, it gets easier.
2. Change your perspective
As psychologist Carol Dweck has demonstrated, those who are in a growth mindset don’t mind failure because they view it as an opportunity to learn. If you’re following opposite thinking — Dweck calls that a fixed mindset — then you see failure as an insult. Flip the script.
3. Always keep moving
Sitting around and brooding about a setback only makes it worse. If you’re having a rough time, make sure your schedule is full of activities.
Take exploratory meetings, do that paperwork you’ve been putting off, make tweaks to your product, cold call some new prospects and catch up with old contacts over coffee.
There’s always plenty to do at a startup, so finding something shouldn’t be an issue.
4. Retain a sense of humour
It can be very difficult at times to find something funny about a challenging situation. The trick is to go back to No. 2 and change your perspective. Ask yourself “What could be funny about this?” If you find the answer, it’s often liberating.
5. Prevent burnout
Your startup is important. Very important. Naturally, when turbulence hits, we throw ourselves deeper into the business to get through it. This can result in burnout, though, and jeopardize much of what is at stake. Take a break.
Spend some time with your family. Go for a run, read a book, see a movie or enjoy a good meal. This isn’t wasted time; it’s a way to prevent fatigue.
6. Meditate for 10 minutes daily
Usually what’s getting you down isn’t your situation, but your thoughts about it. Take 10 minutes a day to meditate, and you’ll see that you have some control over your thoughts.
This will help you with your reaction to life’s challenges throughout the day. The benefits of meditation on stress levels are well proven, including a 2014 study by Johns Hopkins which found meditation effective in reducing anxiety.
7. Practice yoga
Stress can wreak havoc on your body. Yoga helps your breathing and stress levels. A German study from 2005 illustrated yoga’s therapeutic effects. The study looked at 24 people who described themselves as “emotionally distressed.”
After taking two 90-minute yoga classes per week for three months, anxiety scores in the group improved by 30 percent versus the control group. Complaints of headaches, backaches and sleeplessness also improved in the group that took part in yoga.
8. Build a strong support network
The dangers of not having a strong support network are clear. In fact, a 2014 American Psychology Association (APA) survey found that people who felt they had no one to rely on were more likely to report feeling fatigued, overwhelmed and nervous or anxious.
While you may feel like you’re out there alone, you’re not. Seek out entrepreneurs who have gone through similar experiences. According to the APA, “[A]lmost all of us benefit from social and emotional support. And though it may seem counterintuitive, having strong social support can actually make you more able to cope with problems on your own…”
9. Stay focused
“It may not feel like it but setbacks can distract us from our goals and take our focus off what is key. Even if you have to force yourself, remain focused on your goals in the face of challenge – it will help you power through the rough patches. If you must, meditate on and repeat your goals out loud. Doing so can reinforce a powerful sense of focus on these goals. As Henry Ford once said, “Whether you think you can or think you can’t. you’re right.”
10. Learn from your mistakes
As painful as this can be, it’s helpful to have a post-mortem and look at what went wrong. The story of Steve Jobs is a good example of someone learning from his mistakes. Jobs got booted from the company he founded – Apple – and his next venture, NeXT, was a failure. Those experiences helped him return to Apple in 1997 as a wiser leader, one who had tempered his early brashness with humility and appreciation for others’ talents.
Will doing these things help you when you’re having a tough day? Sure. Will they help you in the long run? Definitely. However, there’s a reason that acceptance comes first. There are days when nothing seems to help, but if you know these days will happen, then you’ll also know that they won’t last. Enjoy the ride through startup land.
This article was originally posted here on Entrepreneur.com.
Alan Knott-Craig Answers Your Questions On Money And Partners
From starting the right business, to managing business partners and finding your magic number, there is a secret to happiness.
If I get rich will I be happy? — JC Lately
Does money equal happiness? Mostly, yes. Research in the US shows that your happiness is proportionate to your earnings up until you earn $80 000 per annum. Thereafter, incremental income gains have a negligible effect on your happiness.
In other words: More money will make you happy as long as you’re poor. Once you break out of poverty and enter a comfortable middle-class existence, more money will not make you happier.
These are the top three for old folks:
- I wish I’d spent more time with family.
- I wish I’d taken more risks.
- I wish I’d travelled more.
Therein lies the secret to happiness. Spend time with your family. Take risks. Travel.
But first, make money. Don’t do any of the above until you’re making enough money not be stressed about money.
What is the magic number? — Mushti
The magic number is the amount of money you need to not worry about money ever again. If you don’t need toys like Ferraris, yachts and jets, the magic number is R130 million. Here’s the math: R130 million will earn R9,1 million in interest annually (assuming 7% interest). After tax that is R5,46 million.
Assuming you need 50% to maintain a good lifestyle, that leaves approximately R2,7 million for reinvestment, which is enough to keep your capital amount in touch with inflation for 50 years. The balance of R2,7 million (after tax) is for your living costs. In South Africa, R2,7 million will afford you a lifestyle that allows you to send your kids to a great school and university, to travel overseas a couple of times a year, and to live in a comfortable house.
Over time your living costs (and inflation) will eat into your capital amount. After 50 years you should be down to nil, assuming you earn zero other income in that time.
In 50 years, you will probably be dead. If you’re not dead, your kids will be able to support you (because they love you and they have a great university education).
I am the sole director of a company (the others still have full-time jobs and don’t want to be conflicted) and there is pro-rata shareholding based on our initial shareholder loans. However, I am putting in most of the hard work, together with one of the other actuaries. How best do I manage the director/shareholder dynamic? I obviously want to make as much progress as possible but there are times when I need the input from the others (and their responses aren’t always as quick as I would like). — Mike
If you have any perception of unfairness regarding effort/risk vs reward, deal with it NOW! You can’t do so later. The best approach is honesty. Call your partners together. Explain your thinking. Perhaps argue for 25% ‘sweat equity’ for yourself. Everyone dilutes accordingly. Ideally cut a deal whereby you have an option to pay back all their loans, plus interest, within six months, and you get 100% of equity (unless they quit their jobs and join full-time).
Equity dissent must be resolved long before the business makes money, otherwise it will never be resolved.
What do you think of WiFi in taxis?— Ntembeko
It’s a good idea, but not original. Before embarking on a start-up, you should survey the landscape for competitors. Just because there are none doesn’t mean no one has tried your idea.
It just means that everyone that tried has failed. You need to be 100% sure that you have some ‘edge’ that makes you different from everyone who came before you (and failed). Otherwise you will fail. What is your advantage that is different to everyone who came before?
Read ‘Be A Hero’ today
What You Need To Know About The Lean Start-up Model
The Lean Start-up philosophy was developed by Eric Ries, a Silicon Valley-based entrepreneur who also sat on venture capital advisory boards. He published The Lean Startup in 2011, igniting a movement around a new way of doing business.
The model follows key precepts that include:
Taking untested products to market
The fact that too many start-ups begin with an idea for a product that they think people want, spending months (or even years) perfecting that product without ever testing it in the market with prospective customers.
When they fail to reach broad uptake from customers, it’s often because they never spoke to prospective customers and determined whether or not the product was interesting. The earlier you can determine customer feedback, the quicker you can adjust your model to suit market needs.
The ‘build-measure-learn’ feedback loop is a core component of lean start-up methodology
The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a start-up can work on tuning the engine. This will involve measurement and learning and must include actionable metrics that can demonstrate cause and effect.
Utilising an investigative development method called the ‘Five Whys’
This involves asking simple questions to study and solve problems across the business journey. When this process of measuring and learning is done correctly, it will be clear that a company is either moving the drivers of the business model or not. If not, it is a sign that it is time to pivot or make a structural course correction to test a new fundamental hypothesis about the product, strategy and engine of growth.
Lean isn’t only about spending less money
It’s also not only about failing fast and as cheaply as possible. It’s about putting a process in place, and following a methodology around product development that allows the business to course correct.
Progress in manufacturing is measured by the production of high quality goods
The unit of progress for lean start-ups is validated learning. This is a rigorous method for demonstrating progress when an entrepreneur is embedded in the soil of extreme uncertainty. Once entrepreneurs embrace validated learning, the development process can shrink substantially. When you focus on figuring the right thing to build — the thing customers want and will pay for, rather than an idea you think is good — you need not spend months waiting for a product beta launch to change the company’s direction. Instead, entrepreneurs can adapt their plans incrementally, inch by inch, minute by minute.
Start-Up Law: I’m A Start-up Founder. Can I Pay Employees With Shares?
Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.
Every early stage start-up company battles with restricted cash flow and not being able to pay market related salaries to their employees. Bulking up employee salaries with equity is a common method to attract, retain and incentivise top talent.
Can I pay salaries with shares?
South African labour laws require that employees be paid certain minimum wages, and “remuneration”, as defined within the Basic Conditions of Employment Amendment Act, either means in ‘money or in kind’. ’In kind’ does not include shares or participation in share incentive schemes, as determined by the Minister of Labour. As such, there is no room for start-ups to completely substitute paying salaries with shares or share options. However, there is no restriction in topping up below market related salaries with equity via an employee share ownership plan (‘ESOP‘).
Employee Share Ownership Plans
There are a variety of ways in which employees can be incentivised, and it will always be important for the start-up founders to consider what goal they wish to achieve by incentivising their employees.
ESOPs can be structured in several ways, for example: employees may be offered direct shareholding in the company, options for the acquisition of shares in the future; or alternatively, a phantom / notional share scheme can be set up.
ESOPs permit employees to share in the company’s success without requiring a start-up business to spend precious cash. In fact, ESOPs can contribute capital to a company where employees need to pay an exercise price for their share options or shares.
The primary disadvantage of ESOPs is the possible dilution of the Founder’s equity. For employees, the main disadvantage of an ESOP compared to cash bonuses or bigger salaries, is the lack of liquidity. If the company does not grow bigger and its shares does not become more valuable, the shares may ultimately prove to be worthless.
Some key features to consider when setting up an ESOP are:
- ELIGIBILITY – who will be allowed to participate? Full time employees? Part-time employees? Advisors?
- POOL SIZE – what percentage of shares will be allocated to incentivise employees?
- RESTRICTIONS – will employees be able to sell their shares immediately?
- VESTING – will there be a minimum period that service employees will have to serve with the start-up to receive the economic benefit of his or her shares?
Employee share ownership plans are great corporate structuring mechanisms for attracting and retaining employees, as well as fostering an understanding of the company ethos and encouraging loyalty and productivity. It is essential when implementing an ESOP that all the tax implications are considered and that the correct structure and legal documentation are in place.
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