The transition from corporate life on Wall Street to entrepreneurship is jarring for anyone who takes the leap. The work, environment, and indicators of progress are fundamentally different in many ways.
The challenges you became adept at while working at a large company, like keeping your boss happy and navigating office politics, lose their usefulness when you’re on your own.
I had a particularly jarring experience with my own transition into startup life.
After graduating college, I spent several years on Wall Street. First at a large investment bank working on M&A and capital raising for some of the biggest companies in the world. Then as a private equity professional working on teams investing hundreds of millions of dollars.
It was a fast paced environment with a steep learning curve, but the pull of entrepreneurship became stronger as I got older. After several years in the corporate world, I realized the time had come to make the switch.
Universal lessons on how to make the ‘startup’ leap
The transition from a white shoe Wall Street firm to the near absolute freedom of entrepreneurship required huge life adjustments.
I was able to look back on my experience and identify 4 key lessons. And though not everyone will be running a tech-enabled factoring company, the lessons I learned are universal for anyone considering the employee to entrepreneur leap.
1. Get used to a lack of short-term feedback
This was the biggest challenge for me, personally. As students and then employees, we receive short-term feedback constantly for decades. First your teachers then your bosses tell you how you did on each project.
Adjustments are easy when you know what you did wrong and how you can improve. Unfortunately, this doesn’t exist in entrepreneurship. No one is going to tell you what you did wrong unless you know how and who to ask.
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To help mitigate this problem, I found mentors early on who had been successful in my company’s industry. I also learned to test my ideas and get feedback from existing and potential customers. Your customers are the closest thing you have to a boss as an entrepreneur, so talk to them!
2. Set aggressive schedules and stick to them
Once you’re on your own, your schedule can get warped. The sense of freedom can be both intoxicating and terrifying, especially if you came from a rigid, hierarchical environment like I did.
However, building a business is one of the hardest things you can do. Though no one is telling you about any deadlines, they very much exist. After all, the market is shifting, your customers are demanding, and your competitors are hard at work.
Invest in creating a scheduling system that will keep you honest. I like using Asana, but there are a host of other scheduling tools on the market that will help keep you on track.
3. Customer acquisition will be hard
This is the biggest miscalculation I see among new entrepreneurs. They think that building a great product is all that’s required to bring in users. They believe that “If you build it, they will come.” Unfortunately, entrepreneurship is not like “Field of Dreams” and you are probably not Kevin Costner.
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Acquiring customers initially is always going to be harder than you predicted. A good approximation of the cost to acquire a customer (“CAC”) is to take the industry leaders cost of customer acquisition (annual sales and marketing spend / new customers per year) and multiply that figure by 5.
That may seem high, but no one knows about your company and frankly, no one cares until you make them. The CAC of the industry leader is so low because they’ve already established a brand. Much of their new business likely comes from returning customers or word of mouth, which has a CAC of $0.
4. There are many ways to make a living
In finance, your directives are clear from day one. You’re so focused on running your small part of the machine that you’re not exposed to the countless ways business owners in other industries make money. Even as an investor you’re still an outsider looking in – it’s not operating experience.
Once I allowed myself to explore, I began to see so many possibilities to make a good living. Maybe you need to cut expenses for a couple years as you develop your idea, but there are so many opportunities and niches for bright, endeavoring individuals to take on.
Though it may not seem like it if you feel stuck where you are, the world is a big place.
This article has been edited and condensed.
Min Fang is the co-founder of Harper Partners, which provides working capital funding to digital media, advertising, technology and many other types of businesses. Prior to Harper Partners, Min was a private equity investor focused on specialty finance and retail opportunities. He also previously worked as an investment banker on M&A and capital raising transactions for consumer and retail clients. Connect with @joinHarper on Twitter.