The entrepreneurial transition curve

“A start-up puts you on an emotional roller coaster unlike anything you have ever experienced. You flip rapidly from day-to-day – one where you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined. The level of stress that you’re under generally will magnify things. Incredible highs. Unbelievable lows at whiplash speed and huge magnitude. Sound like fun?”

MARC ANDREESSEN,  NETSCAPE  CO-FOUNDER

I remember the moment we decided to put everything on the line. We were going to build a business. Business had alluded my parents despite their desires. My wife and I were ready to risk our house, our careers, our savings, and our credit for a dream. We dreamed that we were going to be successful with a big house, with many businesses that paid us passively while we travelled the world.

It took 22 months to open the first business, a franchised restaurant. I was so excited the day we opened, I went to a quiet place and cried. I had finally started achieving my dream. Blissfully ignorant, I had gotten into the roller coaster of entrepreneurship.

The first phase of any roller coaster is climbing the hill. Filled with anticipation, the rider is excited, scared, and happy. But at no time, is there a fear of death. The fear of death or destruction only happens to those still on the ground, who fail to jump into the cart. Those on the ground don't see the point of the journey and hence don't embark. They wait and see to watch the result of their friends and loved ones get off the coaster. These people are either paralyzed by fear or they have no desire to be thrilled for a couple of minutes. There's nothing wrong with the people on the ground. They are hard-wired different than those who get on the ride. Same goes for those who never venture into the cart of entrepreneurship.

In this first phase, those in the cart are fuelled by Blind Optimism. Nothing could possibly go wrong. This is going to be an amazing ride, they think as they clickity click to the first apex of the ride. Same goes with entrepreneurs. The ride up the hill is also filled with blind optimism. The 22 months I waited coupled with the next 3 years after I opened, I was optimistic about everything in my business. I was making money. Business was good. Staff was challenging but on the most part good. One person showed me how to make more money through cost savings. I thought to myself, why do I worry about pennies, when I'm making thousands of dollars. 

Then an event changed my entire focus. The roller coaster was now released and I was weaving and bobbing through the loop de loops. With each turn, I became increasingly pessimistic about my operations. The transition curve calls this second phase Informed Pessimism.  Just like a real roller coaster, there is a moment that crosses most people's mind, "what if I'm on the first roller coaster that breaks away from the track?" Momentary fear makes the ride even more exhilarating. But in business, it starts to hurt. There is no safety of track. Business is built on people. And sometimes people don't do what they are supposed to do, including the owner. That's where I was. I stopped doing what I was supposed to do, primarily out of fear. I worked so hard to achieve that level of success that I didn't want to lose it. Everything I did was now based on fear. That was the moment I needed the most help. 

An employee taught me the power of pennies at year five. Some of my long term employees, who were used to the old, carefree Rick, didn't adjust well with the penny pincher person I had become. The same strategies that I dismissed while in blind optimism three years earlier were incorporated into the business. I was now ready to hear what other informed people were sharing. Fear drove the decisions to watch the business even closer. And the business was the most successful through the next two years.

Fear, as the catalyst, drove me to want to sell my businesses. I couldn't see the "light". I was so pessimistic about the future that I couldn't see how the business could succeed in the long term. The third phase of the transition curve is Crisis of Meaning. Being in crisis, there are only two options: get off the ride before you crash and burn or stay on the ride and find the fourth phase, Informed Optimism.

I wasn't optimistic in that business any further. I was emotionally drained. My family was falling apart. Everything I thought I had achieved was built a foundation of sticks. Luckily, we found buyers for our businesses before I hit rock bottom. I fully believe looking back, that I was on the track of terror leading to defeat. I was going to Crash and Burn. My biggest demon was my attitude. The potential defeat was my own doing. I couldn't take them any further. The businesses continue to operate today under renewed leadership, energy and most importantly blind optimism.

Every entrepreneur will go through the four phases of this curve. 80% of small businesses fail in the first 10 years of operations. So most don't get to Informed Optimism.  Knowing where you are in the curve is half the battle. Getting help at the informed pessimism stage is the key to surviving this entrepreneurial roller coaster and ultimately not hitting the Crash and Burn stage. Good Luck!