Why So Few People Become Entrepreneurs . . . and Shouldn’t

Why So Few People Become Entrepreneurs . . . and Shouldn’t

Guest post by Dr. Gary North


Only let each person lead the life that the Lord has assigned to him, and to which God has called him. . . . Each one should remain in the condition in which he was called (I Corinthians 7:17, 20).

How do you know what you have been called to? What is your calling? What is your job? How are these related? How should they be related? If you change one, what effects will that have on the other?

Most people are unaware of the difference between job and calling. They do not have a clear picture of the connections between the two in their lives. They do not understand that by changing one of them, this will probably have major effects on the other. They do not build in the equivalent of airlocks to separate the two, so that if one changes, it does not have seriously disruptive effects on the other.

It gets back to this ancient insight: you cannot change just one thing.

To what are you called? To what are you called in your job, and to what are you called in your calling? How do you know?

The most obvious sign that you are right where you belong is that you are successful. You make more money doing what you do than your could doing something else. You have a lot of responsibility. You are trusted in your organization. You are in a position to get promotions because of this trust. You are trusted because your work is better than average. You do all this by selling no more than 40 hours a week to your employer.


Over the weekend, a site member posted a question about buying a business. I answered it with an article. Within 24 hours, he posted another lengthy question about buying a completely different business.

I also talked to another business – an upholstery refurbishing business. The owner is a Latin American immigrant. A good chunk of his business is cash. The business is on sale for double the book value(paper). This is a labor intensive business. His clientele is rich who can afford to spend lots of money for the niche furniture his claim. This is a cash rich business. He claimed a lot reasons for selling the business, none were convincing. I kept telling him if I were you I wouldn’t sell this business. Finally he admitted he was moving to a tax friendly state as the reason for sale, to do the same business. His cash flow on paper is 1/3 of his net income after taxes. A very modest operation from the outside. He operates from a garage but makes all these niche furniture items. Yet his ask is only double the reported cash flow. I guess he doesn’t want to attract the higher taxes hence the low ask price. I find this a good business. I can use my engineering abilities and expand the product line and add some marketing to it make it a great business. I need to apprentice for a month with the owner to understand the operation.I am a seasoned IT engineer with supervisory experience, looking to be an entrepreneur by buying a good business that makes money. My biggest dilemma is convincing myself to quit working for the boss, convince my wife, parents and inlaws that this is some thing I want. Both me and wife are from families that traditionally worked for employers. My only solace, my dad was a businessman at one point. He wasn’t good at it however he was entrepreneurial in his mid 40s. That left an impact in me to be entrepreneurial. I am not satisfied working for the boss. I am unable to break free from my fears and the negativity around me that keeps telling don’t rush into anything. I want to take the plunge however it’s the convincing part of my immediate family that’s crushing me mentally. The entrepreneurial burn is real however I also realize I need to be pragmatic.

What factors should I consider before I take the plunge? This being a cash rich business what are the challenges I should expect from a taxation perspective?

This man is afflicted by a curse. The curse is simple to describe: he is discontented with his career. He has a successful career. He makes an income well above that of somebody who regards himself as a member of the American middle class. He is probably upper-middle-class. He is, therefore, the recipient of income greater than the income received by 95% of the people on the face of the earth. Yet he is discontented.

He has been bitten by the entrepreneurial bug. He wants me to help him turn that bite into a successful business. I don’t see that as my task. I see my task as getting him into the intensive care unit.

Here is what you should do if you ever get bitten by the entrepreneurial bug. Treat it successfully before you need to go to the ICU. Here is my recommended treatment.


1. Read Michael Gerber’s book, The E-Myth or the updated version, The E-Myth Revisited. I read The E-Myth over 30 years ago. Chapter 1 is the key chapter. He describes people who become afflicted with what he calls an Entrepreneurial Seizure. He capitalizes both words. He describes the affliction as follows:

Inside your mind it sounded something like this: “What am I doing this for? Why am I working for this guy? Hell, I know as much about this business as he does. If it weren’t for me, he wouldn’t have a business. Any dummy can run a business. I’m working for one.”And the moment you paid attention to what you were saying and really took it to heart, your fate was sealed. The excitement of cutting the cord became your constant companion. The thought of independence followed you everywhere. The idea of being your own boss, doing your own thing, singing your own song, became delightfully irresistible.

Once you were stricken with an entrepreneurial seizure, there was no relief. You couldn’t get rid of it. You had to go into business.

The rest of the book is a discussion of what business is really all about and what you have to do to become a successful entrepreneur, which the overwhelming majority of people who start a business fail to achieve.

The technical expert is the person who is at high risk in starting a business. He has lived on a salary all of his career. He has mastered limited technical skills. He is paid well for these skills. But he knows nothing about how it is possible for someone else to pay him for his skills. He does not know how a business owner goes from a set of narrow technical skills to a successful man who basks in the sunlight of positive cash flow. Gerber writes:

Of the thousands of business people I have had the opportunity to know and work with, few were real entrepreneurs when I met them. The vision was all but gone in most. The zest for the climb had turned into a terror of heights. The face of the rock had become something to cling to rather than to scale. Exhaustion was common, exhilaration rare. . . . The entrepreneur had only existed for a moment. A fleeting second in time. And then it was gone. In most cases, forever (pp. 7-8).

Here is the motivation of the person Gerber describes. He wants out. He doesn’t care how he gets out; he just wants out. He is not going into a business because of his love of the business. He is trying to get out of a comfortable, successful way of life in which he is subordinate to a boss. He doesn’t like the hierarchy he is in, despite the fact that it rewards him handsomely for staying in. He does not understand how the hierarchy works in a business. He does not understand what entrepreneurship is about, namely, the ability to make customers happy. He is not focused on customers; he is focused on the techniques associated with the business. This mentality is what Gerber’s book was written to correct.

2. No one should go into business for himself who is not driven by one goal above all other goals: the desire to keep a specific group of customers happy. He has to understand what motivates them. He has to understand how they are able to pay him. He has to understand how to find more customers like them. He is driven by the desire to make those people’s lives better than they are today. He will stop at nothing to do this. He thinks that he has a way to do this, based on his knowledge of a certain set of skills that he possesses. He has mastered these skills. He knows exactly what he is doing in terms of the production of a particular product or service. He then wants to do a better job in serving a specific group of customers than anybody else in the marketplace. He is convinced he has the knowledge to take his unique set of skills, which few people possess, and to put these skills at the service of customers who do not know who he is at present, but who will know in a year or two.

If you are not driven by the desire to make other people’s lives better, don’t start the business. If you do not have the skills, don’t start the business unless you have the money to hire somebody who does have the skills. Also, be prepared to lose that person after you have trained him. He may look at you the way that you look at your present boss. He may have an entrepreneurial seizure. He may go into competition against you. If he is front and center in the business, he may take 20% of your customers with him when he does — the 20% who bring in 80% of your profits.

3. No one should go into business who has not read at least 10 books about running this particular kind of business. Find these books. Follow websites related to the business for at least a year. Attend at least four trade shows relating to the business. Pick up brochures. Find out everything you can about the general operations of this kind of business. If you are coming in from outside the business, you had better read 20 books on the business. Go online and watch YouTube videos.

You have to master the skills, but this is not enough. You have to understand the competition. Who will you be competing against when you start the business? How do these competitors succeed? Who are the three or four major players in the field, wherever the field is located and whatever limits there are geographically on the field? Why do you think you can beat them? Why do you think somebody like you is capable of competing against business owners who have been doing this successfully for 20 years? What will you bring to the table that will persuade the customers of those businesses to switch away from them and start paying you? Can you write down the USP of your business? What is it? How are you going to fulfill it? If you don’t know what a USP is, you are suffering from an entrepreneurial seizure.

4. No one should go into business who has not read at least 10 books on marketing. The heart of every successful business is a successful marketing program. These skills do not come easily. They may seem to come easily, because it is easy to read about them in a book written by somebody who has spent 20 years mastering them. But the difference between reading about these skills and mastering them is enormous. You have to move from the technical skills that you possess, or had better possess, to a customer who does not know who you are, does not care who you are, and is content with his present supplier. You must learn how to change the customer’s mind. This is more difficult than you might imagine. I have spent 45 years trying to master this skill, and I still struggle with its difficulty. I am pretty good at it, but I am about a third-tier writer of advertising copy. Maybe.

5. I think anybody who has not spent at least two years as an apprentice in the field is making a mistake. There is so much about a business that is not intuitive. It cannot be found in books. It is this knowledge that separates the entrepreneurial start-up that survives from one that goes under in the first year.

6. You must know how to write a business plan. It must be detailed. Every aspect of the business needs to be covered. If you cannot write the business plan for it, then do not start the business.

7. You must break down every aspect of the business into its components. You must know how each aspect of the business is going to be performed and at what price. If you are starting a one-man business, you must wear every hat. Gerber’s book goes into this in considerable detail. His point is this: every aspect of the business at some point in the future should be performed by a specialist who is salaried. Your goal must be to fill each slot with a competent performer. You must design the overall operation of the business to gain extraordinary performance from ordinary people. You will not be able to afford to purchase the services of extraordinary people.

8. You need the full support of your wife. At least you should have her confidence that you know what you are doing. She may be fearful, as well she should be, but she should trust your judgment. She should be willing to get behind you when you work 14-hour days, six days a week. At some point she is going to worry about the fact that your life savings are being depleted by the costs of the business.

9. You should start small and part-time. Run the initial phase of the business by devoting two hours a night after work and all day Saturday. You must test the market and test your skills. You must get a sense of what the market requires. This is why an entrepreneur must not work for anyone else for more than 40 hours a week. The extra 20 hours a week that will be required to get the business off the ground must come from somewhere.

Your moment of decision will be when you realize that you cannot grow the business by investing 20 hours a week. You will have to fish or cut bait. You will run out of time. You should not quit your job until the income generated by those 20 hours a week shows positive cash flow. You have to know that you have an outside possibility of being able to replace your present income with the positive cash flow of the business multiplied by three. You will be working 20 hours a week for the business. You will then work 60 hours a week. Your income after expenses should triple. This is what will replace your lost salary.

Here is the takeaway from Gerber’s book and this article: ignore the entrepreneurial seizure. Get it under control. Deal with it by beginning to apply what I have written here. This will help the seizures to subside.

Here is what an entrepreneur should want. What are the specifics of your business plan that will enable you to attain it?

This video deals with someone who is in the second stage of his venture. It generates positive cash flow. Few start-up businesses ever make it to this stage.


This article has been first published here: https://www.garynorth.com/members/19341.cfm



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