How to Overcome the Emotional Rollercoaster of Being an Entrepreneur
You have to make sooo many choices in life. So, if you want to become a successful entrepreneur, then you need to be aware of the fact that when being an entrepreneur your emotions are multiplied (e.g. happyness, sadness) compared to when being employed. This is called the emotional rollercoaster of being an entrepreneur.
In this post, I want to show you (1) why the emotional rollercoaster exists, (2) what emotional situations you can expect during your entrepreneurial journey and (3) how to survive the rollercoaster, so you can focus on what is really important – growing your business.
WHY THE EMOTIONAL ROLLERCOASTER EXISTS
I think, a high risk of outcomes results in increased variance of emotions (e.g. secure outcome, keeping cool or high potential payoff, super enthusiastic when things are going well) which is the root cause for the emotional rollercoaster.
As an entrepreneur, your business will simplistically spoken be either successful or not (e.g. measured by the appreciation in equity value). Once you test your product-market-fit (talking to potential clients, working on a website feature, talking to investors), your expectations will change because you automatically extrapolate the test information into the future. This is the birth of the emotional rollercoaster! Superstars may experience a similar situation.
It’s been quite a roller coaster ride, but I’ve grown and learned a lot about myself. – Christina Aguilera
BEING IN THE EMOTIONAL ROLLERCOASTER!
Let me show you the two possible situations, you can expect to see on your entrepreneurial journey.
1. FROM HEAVEN TO HELL – You are in this situation, when you got some bad news that you extrapolate to the future leading you to believe that all is lost (aka forget about that equity portion you hold :-)). Picture these exemplary situations.
- Losing an important client; imagine your major client, who is responsible for 30% of your sales, calls you at 5pm in order to tell you that from now on he will buy from your competitor. What do think? What do you feel? I can tell you what I think. “This [please insert a really, really bad word] wants to destroy my business. Who does he think he is? God? I have 30 employees who trust me and who are dependent on this business. Arrrr!” Experienced a similar situation? Welcome to the emotional rollercoaster of being an entrepreneur! 🙂
- Investor meeting gone wrong – your business is growing and you are happy about yourself. What a wonderful world. Now, you only need some cash infusion as your operating cash flow refuses to become positive. Thus, you are in talks with some well-known investors whom you are offering part of your equity in exchange for cash. The first meetings went really well and now you are left with two potential investors. Your inbox receives an email from the first potential investor: “Dear [enter your first name here], as you may have read in the newspapers, we acquired an equity stake in your competitor. Therefore, we will not follow up on your investment proposal.” The good news is, you still have one potential investor left. So, you enter the last negotiations quite happily. During the meeting the investor asks some questions regarding your operational performance and identifies a deal breaker he wasn’t aware of before. Damn! We lost our last potential investor and we don’t have enough time for raising capital until our cash runs out. Arrrr!
2. FROM HELL TO HEAVEN – this is the type of situation where you receive good news and extrapolate them into the future leading you to believe that you will be the next Mark Zuckerberg or Bill Gates. Let me show what I mean.
- Performance indicators significantly above plan – you are 12 months into your next startup and you find out that your customer acquisition costs, conversion rates, sales and profit margins are significantly better than expected. What do you think? What do you feel? If you are a little sceptic, then you might think to yourself that you have miscalculated your KPIs somehow. 🙂 Fortunately, your calculations were correct. You can already see yourself as the next mega entrepreneur who is loved by newspapers and girls – and banks (for the money). You throw a party for your employees and you seem to live in a dream.
HOW TO SURVIVE THE ROLLERCOASTER
At this point you know what the emotional rollercoaster of being an entrepreneur feels like. If it’s inevitable to experience these situations (from heaven to hell, from hell to heaven), then here is what can you do about it, so you can focus on growing your business?
managing your expectations + more focus on doing → be less influenced by rollercoaster
Let’s go through each of these drivers, so you know in detail what to do.
1. MANAGING YOUR EXPECTATIONS – When you are in the emotional rollercoaster of being an entrepreneur, then you need to manage your expectations by what I call rationalization. Rationalization helps you improve your emotions when you are down and puts your emotions into perspective when you are too enthusiastic. Let me show you what I mean with two examples.
- When you are feeling depressed and angry, because of loosing a very important client, then visualize your business going out of business and what you will do then (aka your second best alternative). Then you need to rate the second best alternative from 1 to 10 (Unbearable to Awesome). I am pretty sure, after you gave the second best alternative some thought you won’t rate it with less than 5 stars, because you know that you learned a lot during your entrepreneurial journey, made some valuable contacts and can restart with a new, maybe even better business idea.
- When you are super enthusiastic, because you signed a double-digit investment round with well-known investors, then you need to step back and really ask yourself what this means for your business. Receiving funding is great, no doubt about that. But then the hard part is only starting – growing your business. By the way, do you think that businesses who get a funding from a bank (aka debt funding) celebrate as much as entrepreneurs with their equity funding? 🙂 You need to be clear about the fact that this emotional uplifting situation will go over. Therefore, every distraction from focussing on your business should be avoided as much as possible.
2. FOCUS ON DOING – As an entrepreneur it is important to balance the visionary part (aka long term planning) with the operational part (aka doing the stuff that improves your business). If the emotional rollercoaster sets in, then you are too busy imagining the long term future while neglecting the short term part of actually running the business. Therefore, in case you are in the emotional rollercoaster, stay focused on sales, operations and improving your KPIs. Your business and your investors will thank you.
As a RESULT of managing your expectations and focussing on doing, you will be less sensitive to the emotional rollercoaster and thereby more productive as you will not get distracted so easily what is important – to grow your business.