The Role of Fear in Entrepreneurship
Fear has been both a fantastic motivator and the biggest limiting factor I have faced in my career as an entrepreneur.
On one hand, being afraid of becoming a financial failure motivates me to spend time planning and modeling my business to ensure our spending stays within our means. It’s helped us stay profitable while growing from $0 to $2.7 million in revenue in just two years. It’s helped me put away savings and curb my spending.
Fear is a valuable tool…in moderation.
On the other hand, fear still wakes me up at 3am a few times a month. I then spend two hours fixated on the million little things that could take my business down, the goals I’m not going to hit, the customers I might lose, and the risk to my family if I don’t keep the ship floating. Fear is a massive distraction when you let it be one.
Fear is Always There. Don’t Let it Drive.
A lot of people think that entrepreneurs must be fearless, but it’s more complicated than that.
Elizabeth Gilbert, author of Eat, Pray, Love shares her mantra about fear in her inspirational memoir, Big Magic:
“Dearest Fear: Creativity and I are about to go on a road trip together. I understand you’ll be joining us, because you always do…but you are not allowed to have a vote. You’re not allowed to touch the road maps; you’re not allowed to suggest detours…But above all else, my dear all familiar friend, you are absolutely forbidden to drive.”
Every entrepreneur experiences fear. I’ve talked to hundreds of business owners in my career, and I’ve never met one who said they were never scared.
But, the really successful entrepreneurs don’t let fear drive.
The Fears Entrepreneurs Face
Let’s take a look at some of the most common fears you hear from entrepreneurs. Some of these are so strong that they prevent people from ever starting their business and others act like a ceiling on a business owner’s success level. In other words, they prevent entrepreneurs from achieving their full potential.
Probably the most often-cited reason people don’t start a business or they stop growing beyond a certain size is the fear of financial failure.
Sometimes, it’s because they have a certain lifestyle to maintain and taking a smaller paycheck for years would be too big a sacrifice. Sometimes, this fear prevents entrepreneurs from taking on debt to leverage their way to greater success.
Family and Social Pressure
On the other hand, one of the fears I see most but almost nobody admits to are the family and social perceptions of failure.
A few years ago, I met a guy who really wanted to start his own business, but it just wasn’t a path his family would approve of. Their idea of success was going to graduate school and taking a “safe” but lucrative career path like medicine, law, or engineering.
Similarly, I’ve met a few people who had six-figure jobs at big consulting or financial firms and wished they could start a business. But, their spouse didn’t see entrepreneurship as a “real” career path.
Starting a company after you’ve had a successful career can be especially hard because you get used to a certain lifestyle and social circle that’s not always conducive to entrepreneurship. It’s easy to say, “Who cares what other people think of you?” but much harder to ignore them in practice.
“Aren’t you afraid you won’t be able to get a job anymore if your business fails?”
People asked me this a lot when I was first starting out, and I did worry about it a little bit.
But, honestly, the fear of not being able to find a job again went away after I sold $1 million in services in my first 12 months. Even if this thing went belly-up tomorrow, I’d just start something else.
Still, I get it. If you’ve only worked jobs at big companies, it can be hard to see how the multi-disciplinary experience you get as a business owner will translate. That said, I’ve never met an entrepreneur struggle to get a job or be unable to start something new for very long.
Can’t Find an [Original] Idea
This one is probably the most unjustifiable fear on this list because the initial “idea” is such a small part of running a successful business.
In the early days of running a business, your job as an entrepreneur is to figure out what problem people will pay for you to solve. Unfortunately, a lot of would-be entrepreneurs think that good businesses are built off the most novel ideas, so they use the excuse that they can’t find a business idea or that everything has already been done.
The Product/Service isn’t “Good Enough” Yet
A similar fear that prevents people from launching new initiatives or businesses is the fear that it’s not “ready” yet. This is often followed by continuing to work on it until their money or patience runs out and they abandon the project.
I see this most with would-be entrepreneurs who have an idea for a “killer app” if only they could find someone to help them build it, but it also affects established business owners too. For them, the fear that their new product won’t be as good as the first one often limits their ability to grow.
Hiring, Managing, or Firing People
I spoke to a friend recently who stated with pride that despite strong industry tailwinds, he never had to lay someone off during Covid. This sounds admirable, but his fear of taking risks (in the form of hiring to drive growth) has caused his business’ growth to flatline the past couple of years.
Similarly, this fear is behind books like Company of One. Running a business with no employees sounds so much easier than dealing with people issues all the time, but it also puts a firm cap on your company’s potential (not to mention your ability to sell the business someday).
The truth is if you talk to successful entrepreneurs, every one of them will mention how important hiring, managing, and firing people is as a skill. You can’t build a real business without it.
It’s rare that you’ll find the “perfect” time to voluntarily cut your income in order to start a new business or take a big risk in your existing business. But, many entrepreneurs let this hold them back by refusing to invest in expansion or growth at the expense of short-term profits.
If growth is your goal, you have to make short-term sacrifices to get there.
Being Ripped Off, Sued, or Audited
An entrepreneur recently told me that he personally oversaw the hiring of every employee who joined his now 50-person company. I was shocked because hiring was one of the first things I delegated to my front-line managers. But for this entrepreneur, he couldn’t trust that anyone on his team would be as thorough or qualified to pick future employees as he was.
While it’s good to evaluate and mitigate all these risks, fear of things like legal action, being taken advantage of by employees, or being audited are often unfounded. In fact, most people who let these fears hold them back have never actually faced any of them, they just use them as an excuse.
Letting Go of Customers
I’ve been talking to a lot of agency and service business owners this year and almost every one of them has some degree of fear around losing customers. Again, this can be good when you’re in a service business, but keeping bad customers around comes with a cost.
We’ve found that bad-fit customers can take 2-3x as many resources to serve as good ones. That means we’re basically losing money on bad customers, and I know we’re not the only business with this issue.
Ultimately, you have to take risk if you want to start a business, and the bigger and more successful you want your business to be, the bigger the risks you’ll have to take.
That said, this doesn’t mean you have to immediately jump off the deep end.
“The obstacle in the path becomes the path. Never forget, within every obstacle is an opportunity to improve our condition.” ― Ryan Holiday, The Obstacle Is the Way
Facing fear gets easier the more you do it. You will build confidence over time and as you do, you’ll be equipped to take on gradually bigger risks in your business.
Living with fear has been one of my biggest challenges this year, but here are a few things that have helped me:
Taking Risks and Failing
While facing your fear and taking risks has helped me gradually chip away at my fear of financial and personal failure, actually failing has helped the most.
While we’ve had a metioric rise at Draft.dev, it hasn’t been all smooth sailing. In 2021, I nearly ran out of money because we were growing very fast but operating with a negative cash cycle. We had nearly a hundred thousand dollars in receivables, but got down to $10,000 (not enough to make payroll) in the bank.
I had to skip my paycheck, quickly apply for a line of credit, and beg a few clients to get their payments in early.
Facing the fear of running out of money directly made me realize that it’s not actually the end of the world.
Surrounding Myself With Big Thinkers
“You are the average of the five people you spend the most time with.” - Jim Rohn
I love my pre-entrepreneurship friends, but the bigger my company got, the less I was able to connect with them about professional topics. I realized that they were full of fears - getting fired, not finding a job, letting their skills atrophy, etc. - that I just couldn’t relate to.
Having a supportive group of peers, spouse, coach (shout out to Andy Hite), and family has been absolutely critical in helping me put my fears into perspective. Having other ambitious, high-achieving entrepreneurs around me has been a huge motivator and fear crusher.
Exposure to Successful Peoples’ Failures
Similarly, getting to know entrepreneurs who are more successful than myself has also helped me see how minor most failures are in the grand scheme of things.
One of the entrepreneurs I respect most in my network recently told me a story about how he almost went completely bankrupt during the 2008 financial crisis. He had over-leveraged multiple rental properties when the bank came calling for its loan back. Hearing how people like him have literally made and lost millions of dollars multiple times was a huge encouragement.
The tough thing about finding failure stories is that people don’t like to talk about them. You really have to build a lot of trust with someone before you get to meaty stories like this.
I’ve noticed that some entrepreneurs who had a big success in the past will stall out on their second attempt.
A founder I know who recently exited a very well-known software app he founded was telling me about his newest venture. I was really surprised to hear him voicing almost all the fears I hear first-time entrepreneurs talk about: the product isn’t ready, he’s still looking for an original idea, he wants to get all the legal structures right first, etc.
I realized that this guy sees himself as a huge success with a lot to loose. In his last company, he was a co-founder, but this time, he was out on his own. If this new venture failed, he was afraid he wouldn’t live up the the reputation he had built for himself in his head.
Pride increases your fear of failure, so I am making efforts to stay humble. No matter how far you go in business, there’s always further to go, and nobody cares what you’ve done in the past more than you do.
Let’s Talk About Fear
What do you fear most? What’s keeping you from starting a business or growing yours?
Let’s continue the conversation on Twitter.