The Psychology of Entrepreneurship: It’s lonely out there

The Challenges – Blog 1 of 2 in this series about the psychological difficulties inherent in being a successful entrepreneur, and how to overcome them.

Let’s face it, people love entrepreneurs. With the recent success of big budget films about the lives of people like Mark Zuckerberg, the late Steve Jobs, and where figures like Richard Branson and James Dyson are celebrities and cult heroes in their own right, it’s clear that entrepreneurship captures something in the public imagination. Perhaps it’s the perception that we have of these giants of the business world as fearless risk-takers or super-geeks made good that elevates them in our minds; perhaps we admire the personal qualities that have helped them to overcome all obstacles in the pursuit of their dreams. Whatever it is, it’s not simply that they’ve made a big pile of money (though this helps of course). Anyone heard of Anne Cox Chambers (billionaire and twentieth richest person in the US in 2010), for example? Abigail Johnson? No. It’s something in the way they’ve made their money that makes people like Steve Jobs so interesting, and a career as an entrepreneur seem like the coolest thing since Facebook.

Every real-life entrepreneur, however, knows that the success of these famous men and women has come at a price. In an insightful article in The Guardian newspaper, Dr. Nina Burrowes highlights the difficulties inherent in choosing to devote your life to a dream and argues that feelings of anxiety, guilt, doubt and fear are the norm, rather than the exception. These feelings can be particularly difficult to manage in an environment where image is everything and the attitude of ‘fake it till you make it’ prevails. In his 2001 book Global Strategy, Mike Peng identifies that 10% of all suicides annually are committed by self-employed individuals, many of whom are entrepreneurs. In Japan, where the social stigma attached to bankruptcy is extremely high, as many as thirty suicides a day can be linked to the failure of a business.

The challenge, argues Dr. Burrowes, lies in the fact that entrepreneurship brings to the surface many of the difficulties fundamental to the human condition. Take identity for example. When you start a new job as an employee, you’re given a document – a job description – that tells you exactly the kind of person you’re expected to be, for how many hours each day, and what you can expect in return. As an entrepreneur, though, you have nothing, no concrete expectation of reward and no-one to give you feedback on your performance along the way. For most of us, a sense of belonging to something, of having clear ideas about what we are and how we should behave, is extremely important. For an entrepreneur it can be a lonely sort of life.

But it’s much more than this, because the spirit of the company – the product and all the decisions that affect it – comes from you, because you put so much of yourself into it. If the company fails it’s difficult not to see it as a personal failure, a sign that you’re not much good at anything. According to research conducted by Shikhar Ghosh, lecturer at Harvard Business School, the failure rate for venture capital-funded start-ups is three out of four.

With so much at stake, a key issue for the would-be entrepreneur is control. As an employee, your work environment is stabilised to a great extent by the size of the company. As an IT technician in a manufacturing company, for example, you don’t have to worry about seasonal fluctuations in demand – it’s already been anticipated by the accounts department, and the marketing department are working on a solution. All you have to do to ensure job satisfaction and the arrival of the next pay cheque is to do the job you’re qualified and experienced enough to do. Even if you do face a problem that’s outside your ability to solve, it’s unlikely to leave you penniless.

As an entrepreneur, however, particularly in your first few start-ups, you’re often faced with problems that you lack the skills and experience to immediately overcome, and situations that you didn’t have the knowledge or the foresight to predict. And as previously mentioned, the consequences of failure – emotional as much as financial – can be extremely high. Strange to consider that a path which many people choose precisely to give themselves control over their own lives can lead to such a total loss of control in the end.

With so much risk involved and so much uncertainty, it’s a wonder that anyone takes up the challenge to strike out on their own. But plenty of us do. The rewards, as well as the risks, are high. The figure of the entrepreneur takes a special place in our hearts precisely because of the size and nature of the risks involved: they are the risks and rewards inherent in pursuing our own path towards the realisation of our dreams.

Blog 2 in this series deals with strategies and personality traits that can help to overcome these difficulties.

Pointers

  • High profile business people such as Richard Branson and Steve Jobs have glamorised the idea of entrepreneurship
  • But choosing to devote your life to a dream can bring feelings of anxiety, guilt, doubt and fear
  • These feelings can be particularly difficult to manage in an environment where image is everything
  • Dr Nina Burrowes highlights the challenges of having no concrete job description, no guaranteed rewards and no-one to give you feedback
  • If the company fails it’s difficult not to see it as a personal failure
  • Research has shown the failure rate for venture capital-funded start-ups is three out of four
  • A key issue for the would-be entrepreneur is control; when there is no employer to fall back on it’s all up to you
  • You will often be faced with problems that you lack the skills and experience to immediately overcome, and situations that you didn’t have the knowledge or the foresight to predict
  • However the rewards, as well as the risks, are high
  • The figure of the entrepreneur is romanticised precisely because of the size and nature of the risks involved in pursuing your dreams

Apr 14, 2015