Why did you start a business?

By Niel Malan
When presenting seminars to entrepreneurs, I usually start sessions by asking attendees the question: “why did you start a business?” The answers usually fit into three categories:

Freedom
Money
Enjoyment

Although their motives differ, it would seem that most entrepreneurs start companies for a combination of the above reasons. I then ask another three questions:

1. “Do you have more freedom?”

Sadly, the vast majority of entrepreneurs answer a resounding “no!” to this question. Instead of freedom and independence, they often find themselves in the exact opposite position. I sometimes joke by saying to entrepreneurs don’t own businesses, businesses own entrepreneurs! Many businesses are so dependent on their owners that they cannot function without them there. Instead of more freedom, entrepreneurs often have less time, more duties and responsibilities, and all sorts of commitments like leases, payroll, etc. that place limitations on their freedom.

2. “Do you make more money?”

This one usually gets entrepreneurs hot under the collar. Truth be told, most businesses are in survival mode, and hardly show a profit. After paying SARS, creditors and making payroll, there is often not much left for the entrepreneur in the form of profits. I think if more entrepreneurs were making more money, they would be ok to have less freedom. However the combination of having less freedom AND less money at the same time is enough to make anyone question their own sanity for starting a business! Have you ever felt like this?

3. “Do you have more enjoyment?”

To this question I usually get a more positive response, although the answer is conditional. The usual response is “I enjoy part of what I do.” This is good news. At least part of the plan works out. It starts like this: entrepreneurs love making a certain product or rendering a certain service. They start a business because they spot and opportunity, grab a calculator, and work out that they can make a ton of dough by doing it better than the competition. It seems simple and exciting. And the entrepreneur launches out the starting blocks with great fervor. Only to discover pretty soon that there are many things they need to know that they don’t. Taxes, book-keeping, employing and managing people, etc. are often activities that entrepreneurs need to spend a lot of time on for their business to work, but don’t enjoy doing it, and often don’t quite know how. This obviously negatively affects the enjoyment they get from their businesses.

Business is paradoxical.

The Cap Gemini World Wealth Report comes out every year and tells us that South Africa is among the top five countries in the world for creating new dollar millionaires. At last count there were over 40 000 Dollar millionaires in the country. Most of them made money through business and property. Many of my friends and business associates are among these people. Their businesses work. They have freedom, they love what they do and they make great money. Life is good for them. The entrepreneur’s plan works for them.

Few entrepreneurs realise this, but South Africa is the land of milk and honey for sharp people. It is estimated that South Africa has about 2 million businesses at any given time, of which 80% will close their doors in the next two to five years. Of the remaining 20%, a further 80% will close their doors in the next five years. So while literally millions of entrepreneurs struggle, 3 – 4% of entrepreneurs make it big and live the good life.

Strange, isn’t it? So the question begs “what makes the difference?” Is it the industries they are in, or the businesses they choose, or luck? In my experience the differences lie in skill and thinking, nothing else. In fact, many empire builders don’t work nearly as hard as the struggling entrepreneurs.

One of my very affluent friends tells me that the main reason he makes over R20 million a year in profits is because he is lazy. His rationale is that being lazy for hard work forces him to work smart. He has over 200 employees doing all the hard work working IN the business, while he works ON his business for less than a few hours a day, thinking how to work smarter and better.

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