What it actually takes to launch a startup has been glamorized as an easier task than it truly is.
I don’t want to deter you from your business plans, but rather introduce you to the realities of the startup world. So before you quit your day job to startup, here are four crucial (and surprising for some) lessons you should know.
1. Profit takes (a long) time
One startling truth about building your own company is, more often than not, it will take much longer than you think to turn a profit.
When Frederick W. Smith first came up with an overnight-delivery company, now known as FedEx, in 1962, he didn’t fully consider the necessary fuel and service costs. After coming close to bankruptcy and gambling his remaining $5,000 to save the company, Fedex finally made its first profit in 1976. Today, the company brings in an annual profit of $13 billion, but it wasn’t easy getting there.
More recently, the highly promising mobile payments company, Square still hadn’t turned a profit (as of early 2016) since it was founded in 2009, and could only hope for this past year to be its first profitable year.
My business partner and I said we would give our company five years to reach the potential we initially envisioned. Well, it’s been five years, and though we’re profitable, we’re going to need (at least) five more.
2. Opportunity costs are a real thing
Launching a startup isn’t a way to “get rich quick.” The fiscal reality is far from glamorous. So before you set your startup plans in motion, there are two essential questions you should ask yourself: First, how much are you getting paid today? Next, what is the loss of potential gains by making this career move (a.k.a., opportunity cost)?
It’s necessary to think long term. Consider the possible benefits of staying where you are before making the jump into full-time entrepreneurship.
Launching a startup isn’t all about the money. There’s great joy and fulfillment in being your own boss, especially if you’re unhappy working a traditional 9-5. But take it from me, if at year four or five, you are making less than anticipated, be ready for it. The lack of monetary gain may discourage you. In response, you’ll have to think about how to fix it— not only for yourself but for your business as well.
3. Co-founders aren’t always up for it
My saving grace has been my ideal co-founder: someone who works well with me, complements my skill sets and enables the company to succeed in areas where my abilities fall short. However, plenty of challenges arose between us.
If you plan to look for a co-founder, it’s not worth contemplating if it isn’t the right person. After all, it’s not only about sharing duties and responsibilities: It’s about having someone there you can trust to handle the things you can’t.
And of course, if you have a significant other, it’s absolutely crucial they’re on board as well. Not only with the time and fiscal realities of launching a startup, but also with the mental stress as that accompanies it.
There will be bad news, setbacks, broken promises and long hours. And if your significant other isn’t on board, how do you think they will react to the unavoidable drama? I’ve seen long marriages end in divorce, the ultimate cause being one person chose to start a company that the other didn’t believe in or approve of.
At the end of the day, they all must understand the road ahead and accept it–in spite of potential and common pitfalls.
4. Acquisition isn’t the only answer
If your sole reason to start a business is to sell it to another company, then you are in trouble. Your expectations need to be higher.
If you build a company just to be good enough to be acquired by a larger, higher-functioning entity, then what does that say about your own long-term goals? The only way to reach true economic independence is to build a sustainable and profitable that can stand on its own. If done right, you’ll have the choice to sell–or not.
You will experience just about every level of stress known to man when you launch a startup. However, success is absolutely attainable. Just know what it’ll cost, and most importantly if that cost is worth it to you.
This article has been edited.
Brett Goldberg is the Co-CEO and Co-Founder of TickPick. TickPick is a technology company focused on improving fans lives by providing them access to cheaper tickets and by creating products & services that simplify the consumer experience.